SHOWA DENKO CSR Report - sdk.co.jp · This Report has been edited as an annual report on...

SHOWA DENKOCSR Report

This Report has been edited as an annual report on non-financial information, presenting efforts by the Showa

Denko Group to contribute to the environment and society. This Report is divided into the following four sections:

CSR Management; Social Commitment Report; Environmental Efforts and Safety Efforts.

For detailed financial information, please refer to the Financial Results and Financial Statements.

http://www.sdk.co.jp/english/ir/library/results.htmlAs for disclosure items, we analyzed our stakeholders' opinions and requests and covered priority topics,

focusing on action policies and performance in 2011 and giving specific examples.

Please note that the website provides more comprehensive and detailed information on Showa Denko

Group CSR activities, including the latest information and environmental and social activity reports for individual

worksites.

Period covered by this Report

This Report covers information for the period January 1 to December 31, 2011, with some information also

provided for 2012. The term ”the year” as used in this Report refers to the 2011 calendar year. The term ”fiscal year”

as used in this Report refers to the period from April 1, 2011, through March 31, 2012.

Organization covered

”Showa Denko” as used in the text of this Report refers to Showa Denko K.K., while “Showa Denko Group” refers

mainly to Showa Denko and its consolidated subsidiaries in Japan. The financial performance data provided herein

are consolidated figures for the Showa Denko Group; environmental performance data are for Showa Denko K.K.

Where environmental performance data include figures for Group member companies,the scope of applicability is

noted for each category of data. Social performance data provided herein represent information and figures for

Showa Denko K.K. Information on consolidated subsidiaries in Japan and abroad has been added to the sections

of Community Relations and Employee Relations.

Publication date

August 2012(The next edition is scheduled for publication in August 2013.)

Guidelines/guidance referenced● ISO 26000 (2010)●Sustainability Reporting Guidelines 2006 (G3.1 Guidelines) from the Global Reporting Initiative (GRI)●Environmental Reporting Guidelines 2007 from the Ministry of the Environment of Japan

Prepared by

CSR Office, Showa Denko K.K.

13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo 105-8518, Japan

Report Scope

Editorial policies

Editorial policies / Report Scope

An Overview of the Showa Denko Group / Main products

Top Message

Research & Development/Intellectual Property

Future society the Showa Denko Group hopes to create

CSR Activity Report

CSR ManagementPast efforts and Future policies and plans

CSR-related Achievements in 2011 and Issues to Be Addressed

Corporate governance

Risk management

Responsible Care management

Responsible Care Activities Plan

Social Commitment ReportRelationships with our stakeholders

Employee relations

Customer relations

Shareholder and investor relations

Partner relations

Community relations

Environmental effortsResource use and environmental impact

Environmental accounting

Climate change efforts

Reducing chemical substance discharge

Environmental considerations: Atmosphere, water, and, soil

Reducing waste and encouraging recycling

Biodiversity efforts

Safety effortsDisaster prevention

Occupational health and safety

Chemical substances safety efforts

Third-party Verification /Assurance

CSR Report 2012Response to Third-party Verification/Assurance

CSR Report 2012Showa Denko Group CSR Report CONTENTS

24689

101112151820

222428303132

36373841434445

464850

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54

2

SHOWA DENKO CSR Report 2012

3


Petrochemicals

Chemicals

Electronics

Inorganics

Aluminum

Changes in consolidated sales

(Billion yen)

Changes in total number of employees

(persons)

2007 2008 2009 2010 2011 (year)0

12,000

8,000

4,000

2007 2008 2009 2010 2011 (year)0

12,000

8,000

4,000

Consolidated sales by segment

27.9%

14.5%

18.4%

8.6%

13.8%

Changes in consolidated operating income and ratio of operating income to sales

(Billion yen)Operating income （　）%

2007 2008 2009 2010 2011 (year)

0

900

600

300

0

9

6

3

-100 -1

For information on main Group companies in Japan, please go to the following

Others

16.8%

Japan OverseasOverseas

Ratio of operating income to sales

An Overview of the Showa Denko Group

Major products by sector

Petrochemical

Company name: Showa Denko K.K.

Head office location:13-9, Shiba Daimon 1-chome,

Minato-ku, Tokyo 105-8518, Japan

Number of consolidated subsidiaries: 42

Total number of employees: 11,542

● Olefins Division ● Organic Chemicals DivisionThe Petrochemicals Sector is producing and selling cracker products, such as ethylene and propylene,

and organic chemicals derived from them, including acetyls and allyl alcohol derivatives.

Chemicals● Functional Polymers Division ● Industrial Gases Division ● Basic Chemicals Division ● Electronic Chemicals Division ● Specialty Chemicals Department

The Chemicals Sector provides industrial gases and chemicals, high-performance chemicals, elastomers,

high-purity gases and chemicals for the semiconductor industry, and resin composites.

Inorganics● Ceramics Division ● Carbons Division ● Fine Carbon Department

The Inorganics Sector provides ceramics products such as alumina, abrasive, functional fillers and

graphite electorodes for elecronic steel making furnaces, fine carbon products.

Aluminium● Rolled Products Division ● Extrusions/Specialty Products Division ● Shotic Division ● Aluminum Can Division ● Cooling Device Business Development Department

The Aluminum Sector provides aluminum materials and high-value-added fabricated aluminum.

HD (Hard Disk)The HD Sector provides high-storage-capacity HD media for PCs, consumer electoronics and

enterprises.

Electronics● Electronics Materials Division ● Rare Earth DivisionThe Electronics Sector provides compound semiconductors such as ultra high-bright LEDs and rare earth

magnetic alloys.

Advanced Battery Materials DepartmentThe Advanced Battery Materials Department (ABM) provides lithium-ion battery components. In response

to the progress of technical innovation in this area, ABM is working hard to speedily develop cutting-edge

products.

(as of December 2011)

AmericaEurope

China,Taiwan,Korea

Etc.Asia

2

1http://www.sdk.co.jp/english/about/network/group.html

1 2 3 4

3

4

Head Office Nagoya Branch Osaka Branch

1 2

3

Corporate R&D Center

Analysis & Physical Properties Center

Safety Evaluation Center

Corporate R&D Center(Kawasaki)

Production Technology Center(Okawa)

Kitakata Plant

Higashinagahara Plant

Oyama Plant

Oyama Plant (Nasu)

Isesaki Plant

Chichibu Plant

Kawasaki Plant

Yokohama Plant

Chiba Plant

AmericaShowa Denko Carbon, Inc.

Showa Aluminum Corporation of America

Showa Denko America, Inc.

EuropeSHOTIC Europa Industria de Aluminio Lda.

Showa Denko Europe GmbH

F2 Chemicals Limited

China Taiwan KoreaShowa Denko (Shanghai) Co., Ltd.

Shanghai Showa Highpolymer Trading Co., Ltd.

Shanghai Showa Highpolymer Co., Ltd.

Korea Showa Chemicals Co.

Shanghai Showa Specialty Gases Purification Co., Ltd.

Showa Specialty Gas (Taiwan.) Co., Ltd.

Shanghai Showa Chemicals Co., Ltd.

Taiwan Showa Chemicals Manufacturing Co., Ltd.

Lianyungang Zaoling Abrasives Co., Ltd.

Showa Denko (Dalian) Co., Ltd.

Showa Denko Aluminum (Nantong) Co., Ltd.

Taiwan Showa Denko Electronics Co.,Ltd.

Baotou Showa Rare Earth Hi-tech New Material Co., Ltd.

Showa Denko HD Trace corp.

Ganzhou Zhaori Rare Earth New Materials Co., Ltd.

Shodex China Co., Ltd.

Shanghai Showa Electronics Materials Co., Ltd.

Zhejang Quzhou Juhua Showa Electoronic Chemical Materials Co., Ltd.

etc AsiaPT.Showa Esterindo Indonesia

Eternal Showa Highpolymer Co., Ltd.

Showa Highpolymer Singapore Pte.Ltd.

Showa Specialty Gas Singapore (Pte.) Ltd.

SHOTIC (Singapore) Pte Ltd.

Showa Aluminum Manufacturing Philippines Corporation

PT Indonesia Chemical Alumina

Omachi Plant

Shiojiri Plant

Tatsuno Plant

Sakai Plant

Hikone Plant

Tokuyama Plant

Oita Complex

Aluminium Technology Center (Oyama)

Fukuoka Branch

Sites in Japan

Overseas Sites

Showa Denko HD Singapore Pte Ltd.

Showa Denko HD (Malaysia) Sdn.Bhd.

Showa Denko Rare-Earth Vietnam Co., Ltd.

Showa Denko Singapore(Pte.)Ltd.

3

2

1

854.2 billion yen

47.4 billion yen

17.0 billion yen

Sales:

Operating income:

Net income:

Consolidated business results:

4


5


Since the determination in 2005 to strengthen its CSR

activities with the establishment of the CSR Committee and

other measures, the Showa Denko Group has been exerting

its efforts toward “a company contributing to the sound

growth of society” through the supply of products and ser-

vices.

Because the fundamental materials and parts produced

by our Group are used in upstream processes in the manu-

facture of final products, they are not directly visible to gen-

eral consumers. However, facing a crisis like the Great East

Japan Earthquake last year, we realized again that our group

has a wide variety of products indispensable to support the

social infrastructure, represented by sodium hypochlorite

used for sterilization of water and sewerage as well as am-

monia necessary for denitration of exhaust gas, and that we

are required to continue a stable supply of those products.

At the same time, we became keenly aware that our busi-

ness assumes major responsibilities for society, and felt even

more proud of the significance of our business activities. (See

the Special Edition of Showa Denko CSR Report 2011

released last year.)

With regard to the disaster of the Great East Japan Earth-

quake, as we conduct business at four worksites and affili-

ated companies in Fukushima Prefecture, we have many

chances of being informed of the status of the affected

areas. We are well aware of the realistic challenges including

the status of the sufferers’ inconvenient life in many affected

areas in Fukushima Prefecture, and the industries that suffer

from stagnating restoration.

Once again, we would like to pray that the souls of victims

may rest in peace, and we are firmly determined to continue

to provide assistance for restoration of the quake-hit regions

through planning and implementing the activities such as

Fukushima and Aizu Foods and Products Marché. The

Showa Denko Group will exert its efforts to contribute to the

quick restoration of the industries and the life of those

affected people.

The Group has been promoting its five-year medium-term

consolidated business plan “PEGASUS” since 2011. Under

this plan, we aim to materialize an evolving chemical com-

pany group with individualized products to help create a

society where affluence and sustainability are harmonized.

“Energy/Environment” and “Electronics” have been set as

two key business domains.

The CSR Report 2012 summarizes our CSR activities

conducted in link with this medium-term consolidated busi-

ness plan. Additionally, a separate volume of the CSR Report

fully introduces products and services that serve as strong

wings of the flight of PEGASUS, together with detailed expla-

nations on the products and businesses aimed to build a

society where affluence and sustainability are harmonized, as

well as the in-depth illustration of the directions of technologi-

cal development.

The majority of the Group’s products are produced and

distributed to our customers by taking out substances useful

to society, or increasing added values through chemical

reactions or processing based on materials obtained from

the natural world. We are well aware that our whole business

activities have a major impact on the global environment in

that process.

The Showa Denko Group enacted the Responsible Care

Action Guidelines in 1995 as its corporate policy related to

the environment, safety and health, and positioned such

policy as the Group-wide activities, and signed the Respon-

sible Care Global Charter in 2005. Responsible Care is the

chemical industry’s voluntary initiative, representing a com-

mitment to improve the environmental, safety and health per-

formance of chemicals over their entire life cycles, namely,

from the development, production, use to the disposal, in

pursuit of increasing social trust and communication. This

CSR report describes these environmental considerations

from a variety of angles.

For instance, in procuring materials, the Group promotes

collaboration with supplier partners by establishing the

Guideline for CSR Purchasing, which states consideration for

CSR purposes. Also, we investigate the impact of our busi-

ness activities on the environment, the result of which is used

to prioritize our measures to grapple with biodiversity prob-

lems.

What is indispensable for attaining these sustainable

growths is the presence of our employees. We believe it is

also important to create appropriate environment so that the

individual employees can upgrade their capability and dem-

onstrate it to the maximum extent. To that end, we place an

emphasis on building comfortable worksites in collaboration

with cooperative companies, which means happy, healthy

and safe working environment not only for our employees but

also for their families, together with measures to nurture

diverse human resources capable of supporting the global-

ization of the Group’s business activities.

Concurrently, as to stable operations of the manufacturing

sites, we consider it very important to provide environment in

which local residents living nearby understand our business

and can live without anxiety. To that end, we will continue

our activities in pursuit of understanding by local residents of

our business, while promoting dialogues in various forms to

listen to their honest opinions and realize our harmonious

coexistence.

This report provides plain explanations on these general

activities of the Group. Please read our CSR reports and give

us your candid opinions.

With evolving, individualized chemicals,

we contribute toward creating a society

where affluence and sustainability are harmonized

Introduction

Contribution to restoration andreconstruction in the quake-hit regions

Promotion of the Medium-term ConsolidatedBusiness Plan “PEGASUS

For a sustainable growth

T O P M E S S A G E

Hideo IchikawaPresident and Chief Executive Officer ofShowa Denko K.K.

Hideo IchikawaPresident and Chief Executive Officer ofShowa Denko K.K.CEO of Showa Denko GroupChairman of CSR Committee

従業員との関わり

トップメッセージT O P M E S S A G E

6


7


(Number of applications) (%)

2005 2006 2007 2008 2009 (year)0

1,000

800

600

400

200

0

50

40

30

20

10310

228

455

322

221284

387384

205

686

31.133.4

40.742.3

34.8

24.0 26.027.0

28.0

26.0

Number of global applications (Showa Denko)

(Showa Denko) (Showa Denko) (All applicants)

Global application ratio Global application ratioNumber of applications in Japan

Trend of number of our patent applications in Japan and abroad

Research & Development/Intellectual Property

Intellectual Property

Energy/Environment

Acquisition of intellectual property rights and establishment of

patent networks

As the majority of Showa Denko’s businesses are operated globally, we

aggressively apply for patents in foreign countries with the aim of support-

ing those businesses from the intellectual property side.

The chart shown in the right is an excerpt from “Self-analysis data of

Patent Strategy Portal Site 2012” on the Japan Patent Office website. It

illustrates that the Showa Denko’s global application ratios were about

10% higher than those by all applicants.

We use best efforts to secure our superiority in the principal businesses

and newly developed important products based on intellectual property

rights by establishing patent networks.

Risk Management

“Our Code of Conduct” stipulates that the Company shall

respect other parties’ intellectual property rights. To that

end, we have been consistently watching the trend of other

parties’ intellectual property since a patent surveillance system

was established in 1996. At the initial stage of such system,

surveillance was conducted using “paper” documents, and

electronic procedures were introduced gradually from 2005.

Last year, the Company established a new system capable of

monitoring both Japanese and foreign patents including the

Chinese ones by using the group-wide patent search system,

called “Shareresearch” (developed by Hitachi Ltd.).

System relating to employee inventions

Following the amendments to the Patent Act in 2004, the

Company revised its system relating to employee inventions in

2005, and revised it again last year with the aim of improving

fairness for inventors, effective July 1, 2011. In the process of

revision, we had “deliberation meetings” with employees at 21

offices nationwide, to comply with the provisions of Article 35 of

the Patent Act.

It is our policy to pay “a reasonable remuneration” for the

inventor’s contribution as stipulated in the Patent Act, and no

employee has ever entered an action against us in connection

with the remuneration for invention.

Trinity Strategy

Under the new medium-term consolidated business plan PEGASUS, we have decided to focus on the two business

domains of “Energy/Environment” and “Electronics.” To maximize the values we provide to society in the two domains,

we will brush up our proprietary key technologies and acquire innovative technologies, thereby creating new businesses.

We will aggressively promote “open innovation” and establish ties with partners inside and outside Japan, and quickly

realize commercialization of new technologies.

Also, we position the intellectual property strategy as one of our crucial management strategies to promote the Trinity

Strategy operation combined with business strategy and R&D strategy.

BusinessStrategy

IntellectualPropertyStrategy

R&DStrategy

We will contribute to creating a society in which

affluence and sustainability are harmonized through

providing our customers with components, materials and

solutions that lead the advanced and pioneering technol-

ogy domains based on our unique and superior technolo-

gies in the two business domains of “Energy/Environment”

and “Electronics” as set in the PEGASUS.

Future societythe Showa Denko Group

hopes to create

●

●

●

●

Heat-resistant transparent films

Functional monomers

IT-related chemicals

Printed electronics● Next-generation high-density

storage media

Electronics

● LED and High heat conduction aluminum substrates

● Biorefinery● Fuel Cell Materials

● LiB Materials● SiC epitaxial wafers forPower Devices

● Organic EL

　The above data represents data up to 2009 due to time lags from application in Japan until application in foreign countries.

　The graph of the global application ratio (All applicants) was made based on figures taken from portal websites.

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お客様との関わり

We have formulated the CSR policies and plans linked to the medium-term Consolidated Business plan “PEGASUS” which started in 2011.

Each one of the employees worldwide shall act in clear awareness

of corporate ethics and compliance issues.

2011/2015The Group’s CSR Policies

“We contribute to creating a society whereaffluence and sustainability are harmonized”

– That is CSR well established in the heart of each one of us.

CSR-related Achievements in 2011 and Issues to Be Addressed労働安全衛生 Plans for 2011 Achievements in 2011 Plans for 2012

Corporate ethics andcompliance

◎ P13

P14

P16

P15

P15

P16

P29

P29

P30

P30

P27

P26

P24

P25

P31

P32-35

P20-21

－

－

－

－

－

P14

P16

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

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◎

◎

◎

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General riskmanagement

Dialogue withstakeholders

Customers

Shareholders

Employees

Partners

Localcommunitiesand society

Responsible Care

Reviewing and revising the Code of Conductand its guidelines

Expanding education on corporate ethics andcompliance

Disseminating and promoting use ofcorporate ethics hotline

Raising awareness through group discussionsand e-learning

Organizing compliance education system

Reviewed and revised the Code of Conduct and its Guidelines, and issued under the name of “Our Code of Conduct and Its Practical Guide 2012.”

Disseminating “Our Code of Conduct and Its Practical Guide”Issuing a global version

Raising awareness through group discussions, etc.

Expanding education on corporate ethics and compliance

Disseminated by distributing “Our Code of Conduct and Its Practical Guide” to all the Group companies.

Formulating countermeasures against a major quake hitting the capitalReviewing the details of investments stated in the second half of the medium-term management plan

Reviewed the details of investments under the medium-term management plan.

Implemented an in-house training of crisis communications

Implemented the 2nd support program for internal controls in China.

Summarizing the support program for internal controls in China.

Expanding the use of independent organizations for internal audit.

Used independent organizations for internal audit.

Posted full report on website and issued a Special Edition.

Issuing CSR reports

Enhanced the issue of site CSR reports.

Reducing complaints

Mainta in ing dia logue wi th customers through business transactions

Cont inued to improve qual i ty assurance activities.

Maintaining dialogue with customers through business transactions

Reduced complaints. Reducing complaints

Enhanced the Corporate Ethics Month activities.

Organized the level-specific contents of the CSRand compliance education.

Implemented as in the past.

Evaluation Page

Promoting risk management Reviewed the existing risks. Promoting risk management

Promoting countermeasures against majorearthquakes

Follow-up for extracted items of generalaffairs risks

Implementing education on the risks commonlyobserved in the general affairs

Providing support for risk management andinternal controls to overseas subsidiaries

Issuing CSR reports

Considering creating overseas ethics hotline

Promoting IR (promotion of overseas IR)

Responding to SRI(socially responsible investment)

Examining and implementing new activitiesin collaboration with labor union

Promoting programs to support the careerdevelopment of female employees

Promoting CSR procurement

Promoting CSR and environmental publicrelations

Ensuring implementation of RC action plan Promoted based on the plan. See Pages 18-19. Ensuring implementation of RC action plan

Promoting CSR and environmental public relations

Contributing to local communities throughin-house resources

Promoted classes-on-demand, plant tours andinternships.

Conducted environmental public relations in MECC(Minato Eco-conscious Consortium). Posted an advertisement on the environmental management forum.

Contributing to local communities through in-houseresources

Disseminated the self-assessment, anddeepened CSR visits.

Considering horizontal development to affiliatedcompanies

Implemented programs to support the careerdevelopment of female employees as scheduled.Introduced new measures to support reinstatement.

Promoting programs to support the careerdevelopment of female employees

Launched a study team of personnel systems Promoting collaboration with the labor union concerningthe creation of more comfortable working environment

Promoted as scheduled. Responding to SRI (promotion of overseas IR)

Continued response to SRI lists. Responding to SRI Continuing response to SRI lists

Establishing and maintaining human rightsconsciousness

Continued to provide human rights education.

Globalization of employees' nationality Globalization of employees' nationalityContinued to employ foreign national employees

Establishing and maintaining human rightsconsciousness

CSR ManagementThrough the medium-term consolidated business plan PEGASUS, the Showa Denko Group, with its evolving, individu-

alized chemicals, pursues the goal to “contribute to create a society where affluence and sustainability are harmonized.”

As part of its CSR (corporate social responsibility) activities, the Showa Denko Group makes every effort to ensure that

each of its employees undertakes Group activities in good faith and meets the expectations of Group stakeholders.

Comply with the guidelines for social responsibility (ISO 26000),

and turn the PDCA cycles of core issues.

Companywide general risk management shall work effectively

at all levels of each worksite.

Interactive dialogues with stakeholders shall be secured and

strong relationships of mutual trust exist.

CSR Activity Report : CSR Management

CSR Policies and Plans linked to the Medium-termConsolidated Business Plan “PEGASUS”

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11


Corporate Governance

Corporate governance structure

Decision-making/supervision

Business execution

Audit

Cooperation

Board of Directors

IR Committee

President & CEO

Security Export ControlCommittee

Safety Measures Committee

Responsible CareCommittee

Corporate Officers

Business sectors

Auditors

Board of Auditors

Accounting officeAccountingaudit

Businessaudit

General meeting of shareholders

Internal Audit Office

CSR Committee

Risk Management Committee

Corporate Ethics Committee

Management Committee

R&D Committee

1 Corporate governance:In the narrow sense, this term refers to the relationship between the shareholders and the managers of a company and the mechanism or structure of decision making and business operations in the company. In the broad sense, it refers to the relationship between the company and its stakeholders and is also related to the question, “For whom

does the company exist?”

2 Responsible Care:“Responsible Care”is the chemical industry’s global voluntary initiative, representing a commitment to work together to continuously improve the environmental, health and safety performance of chemicals over their entire life cycles, namely, the development, production, distribution, use, final consumption and disposal.

TOPICS

Corporate governanceShowa Denko works to ensure the soundness, effectiveness,

and transparency of its management and to continually improve its

corporate value. To this end, the Group is improving its corporate

governance 1based on the following strategies:

Group managementWhile maintaining respect for the independence of affiliated

companies, the Showa Denko Group has established its Vision,

“Our Code of Conduct”, medium-term consolidated business

plans, management policies, and annual action plans. Group affili-

ates undertake business activities in cooperation with sections in

charge of their businesses and report on the execution of their

business activities in accordance with Group management rules.

●Strengthening compliance ●Strengthening management supervision and

oversight functions●Clarifying management responsibilities●Rapid, effective decision-making and task

implementation●Strengthening the information disclosure system

Risk management is carried out on a Group basis in accor-

dance with Group's risk-management rules. We have exerted our

efforts to establish firmly the group-wide awareness of compli-

ance based on “Our Code of Conduct and Its Practical Guide.”

Showa Denko auditors and internal-audit sections audit and

examine the performance of affiliates as necessary. In addition,

auditors work to ensure coordination with corporate auditors of

key affiliates in various ways, including periodic meetings.

Management OrganizationsBoard of Directors

At Showa Denko, the Board of Directors is responsible for

important decision-making and supervisory functions, while cor-

porate officers are responsible for business execution functions.

The Board of Directors consists of 9 directors, including two

outside director. Chaired by the Chairman of the Board, the

Board both determines the company's fundamental policies and

considers and makes decisions on matters stipulated in the

Companies Act and the Articles of Incorporation, in addition to

decisions related to key issues regarding the execution of busi-

ness operations. The Board of Directors also oversees each

Director's executive actions.

Board of AuditorsShowa Denko employs an auditor system. The Board of

Auditors consists of five auditors, including three outside audi-

tors. Auditors attend meetings of the Board of Directors and

other important meetings within the company, offer opinions

when needed, and audit the execution of business operations,

offering suggestions and advice to ensure that the Company

operates in a sound manner. Auditors also seek to strengthen

consolidated Group management by enhancing the overall

auditing of Group member companies.

Corporate OfficersTo ensure swift decision-making in the execution of business

operations and to invigorate such operations, Showa Denko has

adopted a corporate officers system.

CSR CommitteeShowa Denko has established a CSR Committee at the high-

est management level to oversee all management strategies

from a CSR perspective. Chaired by the President & CEO, the

CSR Committee's membership consists of members of the

Management Committee.

Management Committee and R&D CommitteeMeeting weekly in principle, the Management Committee

consults and makes decisions on issues to be submitted to the

Board of Directors and on important general issues related to

company management. The R&D Committee deliberates and

makes decisions on important issues related to research and

development.

Business-sector structureTo clarify its system of responsibility for implementing business

operations, Showa Denko has adopted a structure based on

business sectors. To ensure thorough performance evaluations

that focus on results, we have also implemented a system for

evaluating the performance of business sectors.

CommitteesShowa Denko has established a number of committees to

handle specific issues central to the undertaking of its business

operations. These include the Risk Management Committee,

the Corporate Ethics Committee, the Responsible Care 2

Committee, the Security Export Control Committee, and the IR

Committee.

Each committee conducts in investigations, research, and

deliberations related to its areas of responsibility.

Internal Audit OfficeAs an organization under the direct authority of the President, the

Internal Audit Office performs internal audits. The Internal Audit

Office investigates the status of execution of company business

operations, including those of Group member companies, and

verifies their accuracy, appropriateness, efficiency, compatibility with

Group management policies and plans, and soundness. These

measures also include assessment of internal control over financial

reporting as well as the planning, drafting, and implementation of

various steps to maintain and improve the quality of such reporting.

Legal AdvisorShowa Denko works to ensure compliance with laws, obtaining

advice on legal matters from its Legal Advisor as needed.

Accounting auditsShowa Denko works to ensure the soundness of its accounting

practices, undergoing periodic accounting audits by certified public

accountants.

CSR Education and Enlightenment ActivitiesContribution to sustainable growth of international society

through manufacturing is set as the management philosophy of

the Showa Denko Group as its basic value.

Practical Guide

Our Code ofConduct

Groupmanagementphilosophy

Philosophy diagram

Our Code of Conduct and Its Practical GuideThe Showa Denko Group clarified in the “Code of Conduct”

and the corresponding Guidelines what should be done by each

employee as a member of society.

In January 2012, we established “Our Code of Conduct and

Its Practical Guide” as a revised version, reflecting the recent

changes in the needs of society to companies as well as the

changes in our Group itself.

They were compiled with a view of what kind of values should

be offered to our stakeholders, upon consideration of contents to

be included and by reference to ISO26000. The booklet

distributed to the Group employees contains “Commentaries,”

“Relevant laws and regulations, and internal rules” and “Points

for discussion” for each item, which is intended for use as a tool

to “understand, discuss and put into practice.”

We will make every effort to disseminate the Code of Conduct

so that each employee will be able to realize the actual

connection of his/her work with society.

Our Code of Conduct and Its Practical Guide

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13


Risk management

TOPICS for 2011

Our Countermeasures against an Earthquake with an Epicenter in the Tokyo Metropolitan Area

TOPICS

Bulletin board screen

Our Efforts during the Corporate Ethics Month for 2012The Showa Denko Group focuses on enhancement of corporate

ethics, compliance and CSR in January every year by setting

Corporate Ethics Month. In January 2012, when the timing coin-

cided with the establishment of “Our Code of Conduct and Its Prac-

tical Guide,” our activi-

ties were centered on

gaining deep under-

standing of our code of

conduct through group

discussions at work-

places and putting it into

practice.

Assuming an earthquake with a magnitude of 7.3 in the north Tokyo Bay,

in which the number of totally destroyed structures is expected to reach the

highest among those earthquakes with an epicenter in the Tokyo Metropoli-

tan Area anticipated by the Cabinet Office, Showa Denko’s Head Office has

checked the seismic capacity of the Head Office building, and is engaged in

securing stockpiles such as food, drinkable water, blankets, etc. in preparation

for an event of damage in electricity, water supply and sewerage systems,

telecommunication and other essential utilities and means of transportation.

In March 2012, Showa Denko signed the “Cooperation Agreement

concerning Accepting People Experiencing Trouble in Returning Home, etc. in

the Event of Disasters” with the Minato Ward Office of Tokyo. Based on this

agreement, we will cooperate in offering part of our facilities for use as

temporary shelters and reserved food and drinkable water to people facing

difficulties in returning home.

The risk-management PDCA cycle

Listing risks Implementingcountermeasures

Managementreview

Proposingcountermeasures

Reviewingcompanywide tasks

Companysummaries

Sectorsummaries

Implementing riskcountermeasure plans

Assessing thepotential impact

Analyzing currentconditions

It was the first time for us to have discussions within a group on

a theme selected by the group while in the past discussions we

had confirmed the details of the former “Code of Conduct and Its

Guideline” in the Corporate Ethics Month. Active exchange of

views was conducted at all workplaces concerning compliance,

safety management, communication in the workplace and involve-

ment with local community, etc.

Reports on the discussions were submitted to the secretariat,

the results of which were disclosed via the intranet. We will raise

our consciousness further by knowing the details of discussions of

other worksites

One of the Group’s challenges on the CSR activities is for each

employee to act with the awareness of CSR on a daily basis. To

that end, we believe that the most important thing is to understand

the content of “Our Code of Conduct and Its Practical Guide,” and

think what should be done, and put it into practice. We plan to

disseminate them not only in the Corporate Ethics Month but also

through in-house training programs and the internal media.

Discussions within a group

1 BCP (Business Continuity plan):

事業継続計画。自然災害や大火災などの緊急事態に備える企業の危機管理手法であり、事業活動を早期に復帰させるための計画。

Risk managementShowa Denko regards risk management as one of the most

important aspects of company management. As such, the company

seeks to improve, maintain, and promote its risk management system.

The Company has established a Risk Management Commit-

tee to promote risk management groupwide. This Committee

prioritizes risks that threaten company policies, plans, and the

Group as a whole based on assessments of their potential

impact and likelihood. It also provides support for promoting mea-

sures to circumvent such risks and to respond to them should

they occur. Major topics affecting the entire Group are presented

for discussion at the CSR Committee, where decisions are

based on deliberations from a wide range of perspectives.

In addition, specific risks involving matters such as environ-

mental protection, security and disaster prevention, chemical

substances, quality, intellectual property, fair trade, export con-

trols, and contractual agreements are managed through a

system of prior examination and decision-making, in accor-

dance with internal regulations. Actions taken in the event of

emergencies, including accidents and disasters, are imple-

mented as stipulated in the emergency situation action guide-

lines and other internal regulations.

The risk-management PDCA cycleThe Group has taken “risk inventories” since 2007, assessing

the importance of risks, proposing and promoting risk counter-

measures, and implementing annual reviews to strengthen risk

management. The results of these efforts are summarized and

presented at meetings of the Risk Management Committee. The

information is organized into specific topics to be addressed

companywide. When necessary, cross-functional efforts based

on these topics are implemented companywide.

Examples of companywide efforts include preparation of the

Business Continuity Plan (BCP) for the event of large-scale

earthquakes and countermeasures against a new strain of

influenza (H5N1) in 2007 and 2008, and responses to actual

outbreak of new influenza (H1N1) in Japan and overseas in 2009.

In 2011, we continued to organize information on the status

of preparation of the BCP as well as countermeasures against a

major earthquake, which we started in 2010.

Business Continuity Plan (BCP)Since 2007, each business section has prepared its own

BCP. After establishing a promotion structure and formulating

basic policies, each section performs a business impact analy-

sis (BIA) and takes other steps to identify key, high-priority mea-

sures. This is followed by process analysis, including identifying

bottlenecks for priority measures and considerations of strate-

gies and countermeasures. These activities are documented

and implemented fully through training and drills.

Furthermore, in the wake of the Great East Japan Earth-

quake, we reviewed the expected impacts of a major earth-

quake on our data center in 2011.

We will act with integrity as a responsible citizen of the international society.1. We will act in strict compliance with laws and regulations and according to high ethical standards.

2. We will promote Responsible Care programs.

3. We will conduct business based on the principle of fair and free competition.

4. We will respect human rights.

5. We will work to prevent bribery and other forms of corruption.

We will provide our customers with satisfaction and safety.1. We will develop and provide “individualized” products, technologies, and services that satisfy our customers and promote the

sound growth of international society.

2. We will ensure stable supply of products that meet customers’ expectations, in cooperation with our business partners.

We will develop corporate culture that helps every member of the Group to fully display his/her ability.1. We will create new values based on mutual respect for personality, free thinking, and constructive discussions.

2. We will give the highest priority to safety, and strive to maintain and improve the working environment.

We will meet the expectations of local communities.1. We will disclose accurate information on our activities in a timely manner to the countries and local communities in which we

operate, so as to maintain good communication and promote mutual understanding.

2. We will grow with the countries and local communities in which we operate, and contribute to their social and economic growth.

We will make vigorous efforts to maintain and improve the global environment.1. We will reduce environmental impact of our business activities, and contribute toward the mitigation of climate change and the

conservation of biological diversity.

2.We will develop and provide environment-friendly products and technologies.

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Our Code of Conduct

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Risk management

(See page 24)

Information SecurityWith the rapid growth of the internet, the quality and quantity

of the information a company can handle and the speed at

which it can do so have grown dramatically. At the same time,

the risk of information-related crimes and accidents has never

been higher, including the theft of personal information, leaks of

internal company information, and unauthorized alteration of

company websites. Showa Denko has established Basic

Guidelines for Information Security, Information Security Regula-

tions, as well as Personal Information Protection Guidelines,

seeking to develop a system to prevent information security inci-

dents and to minimize any resulting damage to its business

while ensuring business continuity. We are also proceeding with

activities intended to raise employee awareness through

e-learning-based training. This will ensure a thorough under-

standing of these basic guidelines and regulations throughout

the organization.

Countermeasures against new threats to the information secu-

rity facing us on a daily basis have been established and main-

tained both by improving facilities and systems, and reinforcing

the internal rules. As part of our efforts to maintain the effective-

ness of information security systems, we take steps to prevent

unauthorized access from outside, and reinforce the measures to

avert information leaks, and strengthen information security gover-

nance at each overseas Group company. With regard to the

internal rules, we revised the information security operational regu-

lations in 2011 to keep them in line with the actual conditions,

and conducted the enlightenment activities of the revised rule.

ComplianceThe Showa Denko Group places adherence to societal

norms and business ethics at the top of its management agenda

and emphasizes compliance in all management activities. In

January 2003, we established the Corporate Ethics Committee

to ensure legally compliant management. Since 2005, we have

strengthened compliance organizations and systems in each

business sector and at each site. Other efforts include preparing

lists of and ensuring thorough compliance with applicable laws

and regulations. In 2010, we strengthened support for subsidiar-

ies in China. Also in “Our Code of Conduct and Its Practical

Guide” established in January 2012, “Compliance and Corpo-

rate Ethics” is placed in the first item for further understanding.

In 1987, in the area of security-related trade controls, we

established the Security Export Control Committee, which works

to enhance compliance with these controls.

Corporate Ethics HotlineOur Corporate Ethics Hotline serves employees of all Showa

Denko Group companies. The purpose of this Hotline is to pre-

vent or quickly correct violations of corporate ethics or of laws,

regulations, or company rules. Under this system, employees

can report any concerns directly to the Corporate Ethics Com-

mittee, through the company intranet or e-mail, telephone, or

post. Anonymous reports are accepted, but measures are in

place to ensure no disadvantages occur when employees pro-

vide names. Other measures also ensure employees filing

reports receive feedback on the results and that this feedback

is adequate.

Since January 2006, in addition to their availability within the

company, these services have been made available at outside

law offices.

Consultation desk for victims ofsexual harassment

In December 2011, we reinforced the function of the con-

ventional consultation desk for victims of sexual harassment by

adding outside consultation services to accept complaints

relating to power/sexual harassment through “Corporate Ethics

Hotline.”

Corporate Ethics MonthThe Showa Denko Group has set January every year as

Corporate Ethics Month since 2004. Traditionally, we engaged

mainly in the enhancement of our Code of Conduct and its

Guideline during this month. In FY2012, we had group discus-

sion meetings using the newly issued “Our Code of Conduct

and Its Practical Guide,” putting our initiatives into practice. Fur-

thermore, all executives and managers have signed and sub-

mitted to the Company “The Oath of Office” and “The Oath of

Compliance with the Code of Conduct and Its Practical Guide”,

respectively.

We also continue to implement an e-learning program on

corporate ethics and compliance for managers, which was

introduced in 2009 to provide required training for personnel

newly promoted to management positions.

E-learning programs on individual laws and regulations, and

information security are also provided, which we will enhance

the contents of the education.

Security export controlsConcerns over development and proliferation of nuclear

weapons and threats of disastrous terrorism, including Iran’s

nuclear programs and the North Korea’s missile launch, have

been increasingly widespread around the world. Meanwhile,

amid the globalization, development of computerization, and

increasing illegal exports by Japanese companies, the Export

Compliance Regulation was enforced in 2010, whereby export-

ers, etc. are legally required to implement proper export con-

trols based on the compliance standards.

The Showa Denko Group has a voluntary internal regulation

for export control to ensure the security export controls. This

regulation satisfies the requirements of the Export Compliance

Regulation. Furthermore, following a partial tightening of the

relevant regulations in 2011 from the perspective of confirma-

tion of trade partners, we reviewed the internal control regula-

tions, etc. implementing the security export control more rigor-

ously.

The Group implements multistage inspections of all products

and technologies for export, and personnel in charge of export

operations participate in educational programs proactively such

as in-house training programs, e-learning activities, outside

training sessions, and practical skills certification exams to raise

awareness of security export controls.

Due to rigorous export control measures and efforts taken

by the personnel concerned, there was no violation of the For-

eign Exchange and Foreign Trade Act in 2011 with regard to

our security export controls.

Establishment of a Legal Guideline (Prohibition of Bribery)

Groupwide efforts to enhance the knowledge and aware-

ness of compliance represent a vital challenge for our group

management.

In 2011, Showa Denko started to formulate legal guidelines

to help the legal personnel of the Group companies to fully

disseminate priority domains requiring special attentions and

criteria to be complied with in their respective companies.

To start with, we established a legal guideline concerning

the prohibition of bribery, following the enforcement of the Anti-

Bribery Act in July 2011 in the United Kingdom under which

non-UK companies and acts are subject to the extraterritorial

application under certain conditions.

Thus, we place an emphasis on reconfirmation and dissemi-

nation of the prohibition of bribery, etc. based on laws and

regulations of each country.

We seek further improvement of compliance level of the

Showa Denko Group as a whole by formulating legal guidelines

as necessary.

　　　修正予定

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17


Responsible Care management

Throughout the entire life cycle of chemical substances, we shall make our best efforts to review and improve business activities from the view-points of ensuring safety and health and protecting the environment.

In manufacturing activities, we shall make our best efforts to reduce the burden on the global environment not only through conventional approaches to environmental protection but also through promotion of switching raw materials, energy conservation, waste reduction and recy-cling, and reductions in the release of chemical substances.

In the development of new products and businesses and in the establishment, enlargement, and renovation of facilities, we shall undertake our best efforts to ensure safety and health and to protect the environment. We shall promote R&D and develop technologies that will contribute to the improvement of safety and health and to the protection of the environ-ment. We shall also promote the marketing of alternative or new products.

We shall investigate the effects of the products and materials we handle on safety, health, and the environment, and we shall encourage our employees to develop a deep knowledge of safe use and handling and provide our customers with such information as well.

In overseas business activities, technology transfer, and international trading of chemical products, we shall give full consideration to ensuring safety and health and to protecting the environment.

We shall comply with international rules and domestic laws and regulations and make our best efforts to cooperate with the relevant international organizations and both foreign and domestic regulators.

We shall participate proactively in various activities related to environmental protection and make our best efforts to communicate with society and local communities to achieve better understanding and trust.

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Responsible Care Action Guidelines

Responsible Carepromotion system

President & CEO

CSR Committee

Responsible Care Committee

Security ExportControl Com

mittee

Corporate EthicsCom

mittee

Safety Measures

Comm

ittee

Energy Saving/Global W

arning IssueSubcom

mittee

ResourceSaving/RecyclingSubcom

mittee

Waste Reduction

Subcomm

ittee

Chemical SubstancesRelease ControlSubcom

mittee

OccupationalHealth and SafetySubcom

mittee

Accident PreventionSubcom

mittee

Risk Management Committee

Aluminum

Can RecyclingProm

otion Comm

ittee

Secretariat(Environm

ent & Safety Office)

Responsible CarePlanning Com

mittee

Formulatingmanagementpolicies andobjectives

Continual improvement

The PDCA cycle

Managementreview

P

DC

AActivity plans

Internal audit,evaluation of

results

Implementation

Responsible Care Action GuidelinesShowa Denko enacted the Responsible Care Action Guide-

lines in March, 1995 as its corporate policy related to the envi-

ronment, safety, and health and declared that it would imple-

ment Responsible Care. Since then, all business sectors of the

Company have been engaged continuously in the relevant

activit ies under these Guidel ines.

These ac t i v i t i es a l so a re be ing

expanded throughout the entire Group.

In 2005 we signed the Responsible

Care Global Charter, which contains

international guidelines to Responsible

Care activities, declaring our support

for and intention to implement Respon-

sible Care.

Responsible Care promotion systemResponsible Care activities are promoted by the Responsible

Care Committee, throughout the Showa Denko organization

and throughout the Group.

As of June 2012, the head office, six business sectors (14

business divisions and 15 sites), three branches, the Corporate

R&D Center, and 15 Group companies 1 engaged in Respon-

sible Care activities.

In addition, as part of its efforts to strengthen the Group's

Responsible Care activities, Showa Denko is expanding the

scope of such activities by ascertaining performance and pro-

viding on-site guidance concerning Responsible Care for

domestic and overseas Group member companies involved in

manufacturing.

Furthermore, the Responsible Care Committee and the Risk-

Management Committee were placed under the CSR Commit-

tee to promote Responsible Care as a core element of our CSR

efforts. We maintain proper internal regulations, etc. to promote

Responsible Care specifically.1 15 Major Group companies which work together with Showa Denko in

promoting Responsible Care (as of June 2012):Tsurusaki Kyodo Doryoku K.K., Tokyo Liquefied Oxygen Co., Ltd., Showa Titanium Co., Ltd., Shinshu Showa Co., Ltd., Showa Denko Packaging Co., Ltd., Showa Aluminum Can Corp., Showa Denko Sakai Aluminum Co., Ltd., Showa Denko Electronics K.K., Showa Denko Kenzai K.K., Union Showa K.K., Niigata Showa K.K., Showa Aluminum Can Recycling Center, HI-PACK CO., LTD., Showa Denko Gas Products Co., Ltd., and Clean-S Showa Co., Ltd.

2 Third-party verificationThis term refers to the verification of the information or data in sustainability reports or

environmental reports of a company or association when the verification is conducted by

an organization independent from the company or association in concern.

The PDCA cycleThe Showa Denko Group works to achieve continuous

improvement in its Responsible Care activities through the plan-

do-check-act (PDCA) cycle of formulating Responsible Care

activity plans (plan), implementing these (do), auditing and evalu-

ating the results (check), and reflecting these via management

review in the next round of objectives and activity plans (act).

Education systemThe Showa Denko Group implements Responsible Care Edu-

cation Programs focusing on occupational safety, environmental

conservation and compliance when employees join the Group and

are promoted. Responsible Care Training Programs for New Sec-

tion Heads of Production Divisions, etc. are conducted every year

at the respective plants, providing practical risk assessment training

using the actual manufacturing sites and operations as training

materials.

We also implement annual periodic training seminars for internal

auditors on environmental management systems to nurture relevant

human resources. We plan to start a training seminar for internal

auditors on occupational health and safety management system in

2012.

Auditing structureThe Showa Denko Group carries out the following audits at

each stage, to confirm that activity plans concerning Respon-

RC training seminar for new employees(Head Office, April 2012)

RC training seminar for new section heads of theproduction divisions, etc. (Kitakata Plant, October 2011)

sible Care are implemented according to plans.

Self-auditingUsing checklists, the workplaces of Showa Denko and major

Group companies evaluate their own Responsible Care sys-

tems and the status of its implementation, promoting continuous

improvements by reporting to the Safety Measures Committee

on the results of these self audits and reflecting such results in

objectives and activity plans of the following fiscal year.

Workplace auditingThe Safety Measures Committee performs on-site audits of

the state of efforts at sites operated by Showa Denko and main

Group companies. The Committee also performs quantitative

evaluations based on the results of audits, identifying weak-

nesses. Furthermore, it provides needed guidance and reports

audit results to the Responsible Care Committee. The Respon-

sible Care Committee reviews these results and reflects them in

companywide and groupwide policies, objectives, and plans.

At manufacturing companies within the Group, both in Japan

and overseas, other than the above companies, Responsible

Care efforts are subject to onsite checking of their status and to

on-site guidance. In 2011, we performed workplace auditing

and inspection of 28 worksites (including the Head Office,

branches and business divisions), 11 worksites of the domestic

Group companies and 6 worksites of overseas Group compa-

nies.

Overall auditingThe Internal Audit Office audits the status of Responsible

Care measures throughout Showa Denko and reports on the

results of these audits to the Responsible Care Committee.

Third-party verification　Showa Denko has undergone third-party verification 2 in

such aspects as Responsible Care activities and the accuracy

of data collection. The content of this CSR Report 2012 has

been verified by SGS Japan Inc.

In the future, we will continue to draw energetically on third-

party verification to ensure continued improvements in our

Responsible Care systems and in our performance.

Global Responsible CareVerification Certificate

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レスポンシブル・ケア行動計画　　　　　　２０１１年実績と２０１２年目標

Responsible Care Action Plan: Achievements in 2011 and Targets for 2012

Every two or three years, the Showa Denko Group establishes a medium-term Responsible Care action plan, which is then used as the

basis for annual action plans during the period covered. All workplaces promote Responsible Care and draft detailed action plans based on

the comprehensive plan, tailored to local conditions and circumstances. The following table lists the policy, plans, achievements, and ratings

for primary activities undertaken in 2011, together with the policy and plans for 2012. We will continue these efforts to achieve our goals.

1 HRM :High Risk Material

2 work-related illnesses :Legally recognized work-related sickness by the Workers' Compensation Insurance Law.

Appearing symptoms of illness caused by exposure to harmful factors under circum-

stances of employers' control.

5 SDS : (Safety Data Sheet)This is a document provided by the supplier to the user (customer) of a chemical

substance, covering such matters as its name, toxicity, and physical/chemical properties;

cautions concerning its handling and storage; and emergency measures.

3 REACH Regulation :EU Regulation on Registration, Evaluation, Authorization, and Restriction of Chemicals

4 CLP Regulation :EU Regulation on Classification, Labeling, and Packaging

Security and fire prevention

Chemical substance safety

Quality assurance

Environmental conservation

△

●労働安全衛生Policy and plans for 2011 Results and progress in 2011 Policy and plans for 2012Evaluation

Occupational safety and health

[Policy]●Zero lost-time and non- lost-time injuries at each site●Establishing the chemical industry’ s strongest safety management system

[Plans]●Enhancing safety strength of worksites and personnel●Correcting equipment and process deficiencies● Improving safety management levels● Following up on special safety activities and strengthening measures to prevent similar incidents

● Expanded the scope of industrial accident statistics (12 worksites of affiliated companies were additionally included).

● Two incidents resulting in lost-time injuries (two in 2010) and zero non-lost-time injury (one in 2010) for the entire Showa Denko Group

●Rate of incidents resulting in lost-time injuries in Showa Denko Group: 0.13 (0.14 in 2010)●Oyama Plant of Showa Aluminum Can Corp. won Accident-free Record

Certification (Third-class) from the Ministry of Health, Labor and Welfare.●Showa Titanium Co., Ltd. and Ohmuta Plant of Showa Aluminum

Can Corp. recognized by third-party safety awards.●Showa Titanium Co., Ltd. certified under the Occupational Safety

and Health Management System (total of 12 sites now certified)

[Policy]●Zero lost-time and non- lost-time injuries at each site●Establishing the chemical industry’ s strongest safety management system

[Plans]●Enhancing safety strength of worksites and personnel●Correcting equipment and process deficiencies● Improving safety management levels● Following up on special safety activities and strengthening measures to prevent similar incidents


[Policy]●Appropriate response to revisions in domestic and overseas laws

[Plans]●Comprehensive implementation of compliance, education, and management structures●Collecting, assessing, and providing safety information●Establishing comprehensive chemicals management database

●Zero violations of chemical substances legislation by Showa Denko Group

●Established comprehensive chemicals management database.●Chemicals Management Officer provided information on relevant

legislation and follow-up training.●Registration prepared concerning substances under the REACH

regulations 3 before deadline for substances that must be registered by 2013.

●CLP-compliant 　4 labels and SDS 　5 amended.

◎

○

[Policy]●Appropriate response to revisions in domestic and overseas laws

[Plans]●Comprehensive implementation of compliance, education, and management structures●Promoting and disclosing information on GPS/JIPS risk assessments●Effective use of comprehensive chemicals management database　

[Policy]●Reducing chemical emissions

[Plans]●Thoroughly disseminating information on PRTR revisions●Developing and implementing reduction plans for each worksite

● Emission of PRTR-listed substances: 372 t, up 15 t from 2010.● Emission of toxic atmospheric pollutants: 28 t, down 12% from

2010, target achieved.

[Policy]●Reducing chemical emissions

[Plans]●Thoroughly disseminating information on PRTR revisions●Developing and implementing reduction plans for each worksite


[Policy]●Making products that offer total safety in use●No product accidents, no major complaints

[Plans]●Performing appropriate product risk assessments●Establishing secure corrective measures

●Product safety secured and zero product accidents maintained by performing appropriate risk assessments for newly developed products and by complying with the standards for products intended for absorption by or contact with the human body and new export.

●Number of serious complaints decreased about 30% from 2010 by identifying thoroughly the causes, and implementing corrective measures. Target achieved.

◎

[Policy]●Making products that offer total safety in use●No product accidents, no major complaints

[Plans]●Performing appropriate product risk assessments (reviewing new-product launch procedures)●Countermeasures against spills :Establishing secure corrective measures to be taken at sources.


[Policy]●Realizing zero equipment incidents

[Plans]●Thoroughly implementing Active Safety activities●Organizing and applying function-specific personnel meetings●Thoroughly implementing HRM　1 examination●Promoting voluntary safety initiatives

● Accidents: Four cases of leakage (seven cases in 2010) in the Showa Denko Group● Active Safety activities expanded to and implemented by affiliated

companies and research facilities.● Function-specific personnel meetings (electric, instrumentation,

machinery, process) were held.●HRM examinations were implemented for four cases.●Oita Complex: Continued certified high-pressure gas operations.●Oyama Plant of Showa Aluminum Can Corp. won the prize of the

Commissioner of the Fire and Disaster Management Agency.

[Policy]●Realizing zero equipment incidents

[Plans]●Thoroughly implementing Active Safety activities●Organizing function-specific personnel meetings and preparing guidelines●Ensuring implementation of HRM examination●Promoting voluntary safety initiatives

●Environmental management

労働安全衛生Policy and plans for 2011 Results and progress in 2011 Policy and plans for 2012Evaluation

[Policy]●Zero environmental problems

[Plans]●Steady implementation and comprehensive awareness of Active

Safety efforts (utilizing checklists to prevent environmental problems)●Planning and implementing reductions in potential risks●Appropriate responses to amendments to laws

● Target of zero environmental problems in the Showa Denko Group attained.

●Utilized checklists to prevent environmental problems.● Implemented measures to reduce risks in each plant ◎

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◎

◎

○

△

[Policy]●Zero environmental problems

[Plans]●Steady implementation and comprehensive awareness of Active

Safety efforts (utilizing checklists to prevent environmental problems)●Planning and implementing reductions in potential risks●Appropriate responses to amendments to laws

●[Policy]●Continuously reducing unit energy consumption

[Plans]●Creating energy conservation measures

[Policy]●Achieving Kyoto Protocol targets for the Showa Denko Group by itself; and preparations for post-Kyoto Protocol

[Plans]● Implementing reduction plans at each site

● Unit energy consumption: 91.4% (compared with 1990 levels), down 0.1% from 2010

● Implemented regular reporting.

● Greenhouse gas emissions: a 22% reduction at Showa Denko, a 20% reduction across entire Showa Denko Group (compared with 1990 levels)

● Implemented the plan to achieve Kyoto Protocol targets in promised period (by Showa Denko)

● 2010 unit energy consumption as designated shippers and reduction plans for 2011 reported to authorities.

[Policy]●Continuously reducing unit energy consumption

[Plans]●Creating energy conservation measures●Exerting all-out efforts to reduce power consumption

[Policy]●Achieving Kyoto Protocol targets for the Showa Denko Group

by itself; and preparations for post-Kyoto Protocol

[Plans]● Implementing reduction plans at each site

●

Occupational safety

Equipment safety

Global warming initiatives

Reducing industrial waste

[Policy]●Achieving zero emissions

[Plans]●Eliminating landfill waste through efforts such as more effective use of sludge Showa Denko: 2,200 t or less Showa Denko Group: 2,500 t or less

[Policy]●Contributing to a recycling-based society

[Plans]●Promoting recycling

● Landfill waste: 2,144 t (down 447 t from 2010) across Showa Denko Group; targets achieved.

●Plastic chemical-recycling production: up 2% from 2010.●Paper-recycling rate (head office): 85% (up 2% from 2010)● Aluminum can recycling: Group participation rate 92%, with each

employee bringing in an average of 189 cans over a three-month period.

[Policy]●Achieving zero emissions

[Plans]● Eliminating landfill waste through efforts such as more effective

use of sludge Showa Denko: 1,900 t or less Showa Denko Group: 2,100 t or less

[Policy]●Contributing to a recycling-based society

[Plans]●Promoting recycling

● Implemented preventive activities to reduce lifestyle-related diseases in accordance with Showa Denko Group Health 21 Plan.

●Current status were reported and opinions were exchanged concerning “Health checkup,” “Prevention and improvement of incidence of lifestyle-related diseases,” “Enhancement of mental healthcare” and “Measures against smoking” at an exchange meeting of worksites.

●Promoted participation in third-party seminars for improving skills of public health nurses and other nurses, and established a subsidy system for seminar expenses.

●Mental health care seminars planned and implemented by each worksite● Provided stress check sheets to employees during National

Industrial Hygiene Week●Oyama Regional Office won the THP (Total Health Plan) Council’ s

Promotion Award.

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●

Chemical substance managemant

Quality assurance

Occupational health

Health management

[Policy]●Zero work-related illnesses 　2

[Plans]●Enhancing sanitation management structure● Improving work environment and work methods

[Policy]●Addressing common priority targets specified in Showa Denko Group Health 21 Plan

[Plans]●Common priority targets

(1) Preventing or improving incidence of lifestyle-related diseases (BMI, blood pressure, fat, blood glucose)(2) Enhancing mental healthcare efforts(3) Reducing smoking rates

●Effectively applying health management system

● Zero work-related illnesses● Realized an improvement through measurement of working

environment such as chemical substances handled, and implemented exposure reduction measures.

◎

○

[Policy]●Zero work-related illnesses

[Plans]●Enhancing sanitation management structure● Improving work environment and work methods

[Policy]●Addressing common priority targets specified in Showa Denko Group Health 21 Plan

[Plans]●Common priority targets

(1) Preventing or improving incidence of lifestyle-related diseases (BMI, blood pressure, fat, blood glucose)(2) Enhancing mental healthcare efforts(3) Reducing smoking rates

●Effectively applying health management system

◎ : Fully achieved (100%) ○ : Achieved 80% or more △ : Achieved less than 80% (Numerical data without range indications apply to Showa Denko only.)

20


21


Very informative

Good

Very informative

Good

Good

Very informative

Very informative

The plant is clean.

The plant is clean.

Good

Very informative

Good

Impressions/feelings Business/product Issue of interest Issue of concern Other commentsExpectations for

Showa Denko

Customers

Localresidents

Shareholders,investors

Authorities

Schools

Employeefamilies

I understood the processes.

I understood the products.



I had a detailed understandingof the business.



I gained an understanding ofhow Showa Denko works.



Technology, Quality

Cost, Competitiveness

Environmental efforts



Technology, Quality

Technology, Quality


Scale, Size

Chemical substances

Technology, Quality






Technology, Quality



Scale, Size

Technology, Quality



Environmentalconservation



Technology, Quality


Employees,Personnel system

Scale, Size

● I was surprised to know that Showa Denko manufactures world-class quality products.● I understood that Showa Denko’s products are commonly used around us.● I was relieved to know that good-quality materials are stably supplied and that

products are manufactured systematically under good quality controls. Positive product development efforts clearly demonstrate the serious attitude of the company.

●Explanation of the production lines was very easy to understand.●This guided plant tour has been an excellent opportunity to learn about the

operational sites of corporate activities.

● I understood that familiar products are made at a plant near our school.　　　　　　　　

● I want the Open Lab to be continued toward the future. I am grateful that the Company provided us with programs for children to enjoy.

● I understood that appropriate measures were prepared against any troubles to prevent negative impacts on the external environment (Drainage, noise, etc.)

● I was surprised to know that Showa Denko’s products were used in my car.● I was happy to know about the worksite where my family member works.● I was surprised to know the epoch-making recycling system during the tour of the

plastic recycling facilities, because I had thought plastics remained as waste.●As I participated in the weekday plant tour, I could easily understand how

people were working at the plant.

Each of us at the Showa Denko Group strives to build relationships of trust with our stakeholders.

In 2009, we began gathering the opinions, comments, and requests from stakeholders visiting our worksites. Although we have not

systematized the information-gathering procedures, introduced below are some of the viewpoints expressed during these visits.

(Following impressions and opinions were given to us mainly by those who participated in our guided plant tours.)

The information gathered will be organized by each worksite and by the entire Group and examined during reviews of our Group CSR

issues, improving our CSR performance and allowing us to incorporate these perspectives into our risk management activities.

Social Commitment ReportThe Showa Denko Group places great emphasis on continuous dialogue with customers, shareholders, local commu-

nities, raw materials and service providers, and our employees and their families. We believe the relationships of

mutual trust we have established with these stakeholders are critical assets of the Showa Denko Group.

We strive to ensure satisfaction with Group performance and continued shareholding.

We strive to maintain mutually ben-eficial relationships based on trust in transactions with the Group.

We strive to provide rewarding worksites in which employees and their families can take pride.

We strive to ensure that local communities and authorities have confidence in the safety and stability of our operations.

We strive to ensure satisfaction with Group products and services, thereby securing our customers' patronage.

CSR Activity Report: Social Commitment Report

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─

─

─

─

─

─

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Relationships with Our Stakeholders

The Showa Denko Group communicates with its stakeholders in various contexts.

We believe it is important for us to review the Group's visions for the future with thorough understanding of our stakeholders' expecta-

tions and concerns for the Group, which are identified through this communication.

The views of our stakeholders can serve as another yardstick for the Group to determine the priority assigned to various risk manage-

ment issues. Understanding the Group's issues from the perspective of our stakeholders helps us correctly prioritize Group risk manage-

ment issues and makes it possible for us to respond to stakeholder expectations with more rationales, thereby permitting risk manage-

ment in the broader sense.

Communicating with stakeholders

Stakeholder perspectives

Contributing to local communities

Active information disclosure

Developing eco-friendly products

Energy and resource conservation efforts

Preventing accidents that could cause damage to surrounding areas

Preventing production stoppages that could inconvenience many parties

Preventing product liability accidents

Preventing environmental contamination and pollution

Preventing industrial accidents

Eliminating discrimination; safeguarding human rights

Preventing improprieties

Preventing misconducts

Preventing violations of the law

Responding toexpectations...

Failing to respondto expectations...

Risk management (in the narrow sense)Activities that safeguard corporate value by focusing on actions

that prevent damage to stakeholder expectations

CSRActivities to maintain and improve corporate value

by responding to stakeholder expectations

Increased sales

Growing numbers of business associates

SRI fund allocation

Improved fund-raising capabilities

Improved brand image

Improved reputation

CompensationLoss due to business suspensionLoss due to property damageSuspension of business transactionsBoycotts

Corporatevalue

Expectations for the company

Expanding over time

Expanding over time

Decline in asset valueDifficulty in finding new employeesImpaired fund-raising capabilitiesDamage to corporate image

Positive aspects

Negative aspects

Comm

unication

Consumers

SocietyNPOsNGOs

Administrativeoffice

Customers

Shareholders

Partners

Localcommunities

Employees

Customers

Shareholders and investors

Employees and their familiesLocal communities and authorities

Business partners

22


23


Employee relations

方針

Percentage of handicapped employeesShowa Denko’s training system

Showa Denko

2008/6 2009/6 2010/6 2011/6

1.8%

2012/3

(%)

(Year/month)0

Legal requirement

2.5

2.0

1.5

My experience of participating in the training session for Chinese employees at the management levelSince 2004, I have engaged mainly in sales activities for Showa Denko’s business development in China as a member of Showa

Denko Group. To date, I became a manager from just a person in charge, and now I understand the significance of working

together with all members of the department.

Last year, I attended the training session for Chinese employees at the management level, and obtained knowledge on manage-

ment which I had lacked until that time, and comprehended how managers

should be. Now, I apply what I learned to my work. I will exert my efforts to

demonstrate the presence of Showa Denko in the Chinese market while not only

performing my duties but also providing my subordinates with guidance.

VOICE

Yong WangDirector

New Business HeadquartersShowa Denko (Shanghai) Co., Ltd.

Training session held in China for local employeesat the management level

Respect for human rightsPolicies and systems of respect for human rights

The Showa Denko Group exerts every effort to address

human rights issues with a firm belief that respect for human

rights underlies all our efforts to realize the vision stated in its

management philosophy, “a company contributing to the sound

growth of society.”

The Human Rights Committee of Showa Denko, chaired by

the director in charge of human resources, assesses the activi-

ties of previous fiscal year and determines medium- to long-

term action plans. In recent years, the Committee has consis-

tently provided assistance to the career development of female

and non-Japanese employees, and expanded job opportunities

for handicapped persons, while promoting these activities within

the Group companies.

In December 2011, Showa Denko’s sexual harassment con-

sulting desk and countermeasures were extended to other

domestic affiliated companies with the aim of strictly addressing

the problems of bullying and harassment at worksites including

sexual harassment problems across the Group.

As to human rights promotion activities, we exert our best

efforts to improve awareness of human rights among our

employees based on the policy determined by the Human

Rights Committee to implement group training programs and

lecture meetings.

Enhancement of personnel system and trainingRevision of training systems

Under the ongoing medium-term consolidated business plan

“PEGASUS,” the Showa Denko Group sets its policy to “assist

motivated employees to grow further by providing right roles

depending on their capabilities (OJT) and training opportunities

(OFF-JT).”

As part of the policy, we formulated new educational systems

for the entire Group in 2011. The chart below illustrates the rela-

tionship of the educational systems with the “Forest,” represent-

ing energetic and diverse people growing and evolving.

Communication-based personnel evaluation systemAs one of the management tools for maximizing the achieve-

ments of the organization by increasing the participation of all

employees in the management strategies, the Company has

developed an MBO (Management by Objectives) system.

Through candid discussions between a superior and a sub-

ordinate starting from setting objectives to evaluation, the mutual

understanding and satisfaction is enhanced. Furthermore, a

superior nurtures human resources by making his/her expecta-

tion known to the subordinate, providing assistance toward the

attainment of objectives.

Results of evaluation are reflected on the treatments (salary

and bonus) as contribution of the individual to the company.

Recruiting and fostering globally competitive personnelRecruiting and fostering competitive personnel who support rapid

globalization of our business activities is one of the most crucial

themes for us to remain as a company group with a distinctive pres-

ence in the international business community.

As part of such efforts, Showa Denko has been pursuing recruiting

activities to provide an environment in which outstanding human

resources can make full use of their abilities and capabilities, regard-

less of nationality. To that end, we hire non-Japanese university

graduates on a regular basis, not just foreign students graduating from

universities in Japan, but also those graduating from universities in

China, Thailand and Singapore by directly interviewing students at

those universities. Those global employees receive Japanese

language training after joining the company and apply their advanced

and specialized knowledge and skills to their work.

In the aspect of human resource development, Showa Denko

offers short-term study-abroad programs for learning foreign

languages (e.g., English and Chinese), as well as two-year programs

for research, investigation, and acquisition of advanced management

knowledge. The Company sends employees overseas based on

specific planning.

Furthermore, the Company conducted a one-year group training

sessions in 2010 for overseas non-Japanese full-time employees at

the management level as part of the medium- to long-term programs

of nurturing non-Japanese employees at overseas subsidiaries. In the

training period, the 17 participants applied their knowledge and skills

that they learned to the resolution of problems at their workplaces,

concluding the sessions

by making presentations

of the achievements.

Offering opportunities for diverse individuals to make full use of their abilities

Employment of the agedSkills and expertise that had been fostered by those who

mandatorily retired are assets valuable not only for themselves

but for the company. Therefore, Showa Denko has a reemploy-

ment system which was introduced in 2006 so that those retir-

ees can continue to make use of their precious assets for the

company, and contribute to the nurturing and passing on such

techniques to younger employees. Many of those reemployed

play active roles in the company using experience unique to

them while working the same way as in the past as reliable

instructors in the fields of their specialties.

Employing handicapped personsIn a bid to create workplaces where a wide range of indi-

viduals can work side-by-side, Showa Denko consistently

employs handicapped persons and provides them with career

advancement opportunities. Since 2006, the ratio of handi-

capped employees has consistently met the legal requirement.

By working with Public Employment Security Offices and

special-needs schools, Showa Denko continues to address

the development of job opportunities so that handicapped per-

sons can make the most of their own individual abilities.

Business nurturing course

Support for nourishing a breeding ground for growth and evolution

Programs by function/Support for self-developm

ent: Support for diverse technologies and individualities

Programs by role: Support for fulfilling the roles and implementing MBO according to growth of individuals

Programs by issue: Assisting to resolve problems in the environmental changes and obtain higher points of viewExternal

environment New seedsSelf-DevelopmentProgram (SDP)

Programs by issue of sector,plant and regional office

Coexistence

inheritance

ManagementLeaderCourse (MLC)

Run-up-Program

Study-abroad program

Specialized trainingby function

Support forself-development

Each sector and worksiteClass K training programs

Training for R1- appliedemployees

Career training programs

Each sector and worksiteClass S training programs

E-learning programs for those newlyassigned to management positions

Training for new managers and leaders

Training for new general managers

Training programs for managers ofsectors, plants and regional offices

Showa Denko Group’scommon training programs(management philosophy, CSR, human rights, common knowledge of the companies)

Superior postqualificationtrials

Class Squalificationtrials Management

qualificationtrials

Partners

New ideas

Contributiontargets

OJT for

TeamworkRoles assumed dependingon growthRight person for the right job

Evolution

Growth

Competition

Soil

Diversity

Career-planning system (CPS)Class K grade-up trials

Class Cselective trials

24


25


Employee relations

方針

VOICE

Principal support systems for a sound work-life balance

Main systems Description

Childcare leave

Cumulative leave

Family care leave

Shortened workinghours for childcare/family care

Eligible: Employees with one or more years of continuous service who live with dependent children of less than two years of age. Available through the day preceding the child's second birthday.

Eligible: Employees with one or more years of continuous service and who have a child of preschool age or who are eligible for family-care leave. Eligible employees may choose to reduce standard working hours by up to two hours/day.

Eligible: Employees who have accumulated leave time (annual paid holidays carried over from year to year). Eligible employees may take leave to attend school events at day nursery, kindergarten, or elementary school until their child graduates elementary school, or to care for a child until the child graduates elementary school.

Eligible: Employees with one or more years of continuous service who have a family member requiring nursing care. Both short-term leave (30 days in total over a three-month period) and long-term leave (12 consecutive months or 12 months in total over a two-year period) are offered.

Number of employees who took the advantage of the work-life balance support systems (January to December 2011)Showa Denko K.K. (including employees on loan)

Male Female Total

Childcare leave

Family care leave

Cumulative leave *

Shortened working hoursfor childcare/family care

34

2

2

512

33

1

25

81

67

3

27

593

My experience of using Reinstatement Support ProgramIn 2010, I gave birth to my first son, and returned to my work after taking almost one-year maternity

leave before and after childbirth combined with a childcare leave. At that time, the reinstatement support

program was in the trial stage, and I was a little concerned about the program. However, I decided to

apply for the program in the hope that I would be able to maintain the motivation of returning to work.

At the regular interview, I felt easy to speak when I followed the “Interview sheet” and shared neces-

sary information with my boss. In addition, I was not worried about returning to work as I had been

informed of the work site by e-mail once a month.

I used to communicate well with my boss on a daily basis, but after taking advantage of this program,

I could consult with him more specifically concerning the compatibility of raising kids and working. Now I

am positive in thinking of my future career.

Hiring and developing female employeesShowa Denko provides all employees, regardless of gender, age, or

nationality, with opportunities to demonstrate their competence. It

promotes a management policy emphasizing respect for employee

diversity, with the goal of further vitalizing corporate organizations.

As part of these efforts, during the period from 2008 to 2012,

Showa Denko intensively seeks to create opportunities for female

employees in Japan on a non-consolidated basis to actively demon-

strate their competence.

During 2010, the company continued to implement policies to

actively employ and assign female employees to various positions, with

the goal of supporting career/ability development, raising awareness,

and creating an environment that furthers diverse work styles.

Consequently, the percentage of female employees at Showa

Denko as of the end of 2011 rose to 8.7% (an increase of 0.6 percent-

age point from the previous year) and to 9.7% (an increase of 0.4

percentage point from the previous year) on a consolidated basis in

Japan. On a globally consolidated basis, female employees accounted

for 19.5% (an increase of 0.5 percentage point from the previous year).

The number of female managers doubled to 14 as of March 2012 from

7 as of the end of 2007 on a non-consolidated basis.

Showa Denko continues to foster a corporate culture that allows a

diverse workforce, including women, to demonstrate their competence

and capabilities.

Creating a comfortable workplaceShowa Denko believes that it is essential for its future devel-

opment to encourage employees to work with vigor and enthu-

siasm, and in harmony with society so as to meet sensitively

the needs of society. We conduct employees’ opinion surveys

on a regular basis, and other questionnaires and interviews to

understand the needs of the employees, results of which are

used for our personnel management.

As part of these efforts, Showa Denko is working to reduce

working hours. We will also take various measures, including a

reexamination of ways of working, to link these efforts to further

reductions in total working hours as well as the rising percent-

age of annual paid holidays taken by employees.

Promoting mental and physical healthTo work vigorously without anxiety, it is important for employ-

ees to maintain and promote their own health and the health of

family throughout their lives. To this end, we have been pro-

moting diverse initiatives based on the Showa Denko Group

Health 21 Plan since 2005 with a focus on safeguarding the

health of employees. In 2011, based on the results of health

checkups, each employee received health guidance and

encouragement to prevent or improve conditions of lifestyle-

related diseases such as metabolic syndrome through the

Group’s common priority targets to (1) prevent or improve con-

ditions related to lifestyle-related diseases (BMI, blood pres-

sure, fat and blood glucose); (2) enhance mental healthcare

efforts; and (3) reduce smoking rates. Exercise and healthy diet

seminars were also held to motivate employees to better take

care of their health.

In 2012, we formulated a Mental Health Care Plan at 28

worksites nationwide, and established a mental health care

promotion system by positioning the Mental Health Promotion

as the first priority. We will continue to prevent Mental Illness by

holding seminars on job

line care and self-care pro-

grams, as well as using a

selfstress check table.

Relations with the labor unionShowa Denko and the Showa Denko Labor Union have built

relations of mutual trust through years of dialogue. For both

parties, the fundamental policies of labor agreements are: (1)

solving problems through dialogue; (2) pursuing employment

stability and rewarding work; and, (3) improving working condi-

tions by achieving together both company growth and improve-

ments in profitability.

Most recently, in order to materialize better personnel

system, a Personnel System Study Group was established by

the people both from labor and management sides, and

discussed on the ideal future of the personnel system of the

company.

Promoting a sound work-life balanceShowa Denko provides a variety of work-life support pro-

grams suited to diverse life stages of employees. Furthermore,

we promote the following measures to encourage both male

and female employees to take advantage of the childcare leave

program.

“Childcare leave campaign for fathers” (Started in 2008)

Toward the summer holiday season, the company explains

on the childcare leave program to qualified male employees

and their superiors, with an application form attached. To date,

more than 90 fathers took advantage of this program.

“Reinstatement support program” for those taking the childcare leave and the superiors (Started in 2011)

This program was introduced with the aim of encouraging

smooth reinstatement and acceptance at the workplace by

implementing regular interviews with the superior, communica-

tion with other employees on childcare leave using SNS, and

self-development through e-learning systems during the period

from pregnancy, childcare leave to reinstatement.

Labor-management Joint Responsible CareTraining (Tatsuno Plant)

“Mental health case study simulation” seminar

Yukiko IkawaOsaka BranchShowa Denko K.K.

Ms. Ikawa (Left) interviewed by Mr. Sasai, her superior (Right)）

２０１１年の重点品質目標

Change in the number of employees on consolidated basis

2007 2008 2009 2010 2011

(persons)

0

1，000

2，000

3，000

4，000

5，000

6，000

7，0006，025 6，246 6，449 6，101 6，031

588575496

5，304 5，5105，115

5，496 5，511

566

1，792 1，695 1，625 1，638 1，663

414

Total number of employeesin Japan on consolidated basisTotal number of all overseasemployees on consolidated basis

Number of female employeesin Japan on consolidated basisNumber of overseas femaleemployees on consolidated basis

(year)

Change in working hours (per employee per year)

Annual paid holidays taken (per employee per year)

2，076.0 2，048.4 1，922.4 2，013.6

2，063.2 2，054.4 1，969.3 2，019.2 2，019.5

2007 2008 2009 2010 2011

2007 2008 2009 2010 2011

0

500

1，000

1，500

2，000

2，500Manufacturing industry averageShowa Denko (actual working hours)

Manufacturing industry average

(year)

(year)

Showa Denko (actual working hours)15

10

5

0

(hours)

(days)

9.9 9.9 9.89.6 10.0

13.3 13.9 14.2 13.1 12.8

1

2

1 The manufacturing industry average was prepared using the data in the “Annual report on the monthly labour survey” published by the Ministry of Health, Labour and Welfare.

2 The manufacturing industry average was prepared using the data in the “General survey on working conditions” published by the Ministry of Health, Labour and Welfare.

* Number of employees taking the advantage of cumulative leave includes those who

took this leave with qualification other than for work-life support system.

26


27


Customer relations

Trends in annual numbers of complaints (With a score of 100 representing the number of claims in 2006)

30%(compared to 2010)

0

20

2006 2007 2008 2009 2010 2011

40

60

80

100

（%）

(Covering Showa Denko K.K. only)

Year

Index

Ensuring product safetyObservance of relevant laws and internal rules

To make it possible for customers to use Showa Denko Group

products in full confidence, product safety must remain a top prior-

ity issue.

With this in mind, we have established the Quality Assurance

and Quality Control Rules (see illustration below) as company rules.

The Rules are periodically reviewed and revised to bring them up to

date with current conditions. We abide by them in the same way

as we do laws and regulations pertaining to products. See the chart below

These rules have been established to ensure the rational,

systematic implementation of product-safety activities through all

stages, including product design and development, commercial

introduction and manufacture, and sales, as well as after-sales

information management.

For products and ingredients that might be absorbed directly or

indirectly into or that come into contact with the human body, such

as raw materials for pharmaceuticals and cosmetics, we’ve estab-

lished effective systems to ensure the products we provide to our

customers are always safe. These include rigorous screenings of

Quality Assurance and Quality Control RulesThese rules have been established as the basics to

ensure the rational, systematic implementation of product-

safety activities through all stages, including product design

and development, marketing and manufacture, and sales,

as well as after-sales information management.

In the Quality Month in November 2011, the Quality Control Seminar

was held at Yokohama Plant. In the lecture given by a member of the

Quality Assurance Office, the attendees learned various statistical methods

required to the Group to prevent defects from occurring by e-learning.

Quality control seminar held at Yokohama Plant

An example of textbookTOPICS for 2011RULE

Product safety screeningProduct risk assessmentSafety tests

Management of after saleinformation

Screening before concluding contractsand specificationsScreening of sales and PR materials

New-product launch proceduresQuality assurance capability screeningProcedures for changes inmanufacturing conditions

Design and development

Sales

Marketing and manufacture

After-sale

Materials

Spine

Middle boneBig bone

Smallerbone

Smallbone

Manpower

Machines

Method

Priority quality targets for 2011●Ensuring implementation of product risk assessment●Ensuring establishment of corrective action systems

Conducting product analysis

products brought to market and mechanisms that require strict

compliance with specified procedures in the event of any change

in manufacturing conditions. These procedures thoroughly account

for the possible effects of changes on product quality.

The screening process does more than simply verifying product

safety: Screening committees and other organizations also under-

take thorough studies of potential risks associated with each item

and ways to avoid such risks. Corresponding to various stages of

product life cycle from design and development to after-sales,

these studies examine various aspects, including the properties of

each product, intended use, usage patterns, and user characteris-

tics and issues related to disposal.

Efforts to meet environmental and social demandsThere is growing sentiment worldwide, particularly among

customers in the information technology, electronics and auto-

motive industries, to select and procure products with the

lowest possible environmental impact, based on the philosophy

of caring for the Earth through all stages of a product's life cycle,

from production, through use, and all the way to disposal.

The Showa Denko Group responds appropriately and in

good faith to meet customer requests to reduce the use of

harmful substances and to reassure customers that the

Group's products do not use or incorporate harmful chemical

substances subject to regulations in the EU or other regions.

The Group also responds in good faith to CSR-related inquiries

and surveys from customers.

Improving quality assurance and quality control levelsQuality management system (Quality control scheme)

Rather than a defensive approach to quality assurance that

seeks to prevent defects from occurring, the Showa Denko

Group implements a proactive approach in which customer

satisfaction constitutes the key to the Group's own satisfaction.

The Group does this by developing and supplying products

that will satisfy our customers.

Nearly all Group member companies have undergone

inspection and registration of quality management systems

under applicable international standards, including ISO 1

9001 and ISO/TS 16949. These Group companies constantly

strive to improve the quality of their products and services by

applying and improving the effectiveness of their quality man-

agement systems.

Reducing complaintsTo minimize problems for our customers, the entire Showa

Denko Group works to reduce the number of complaints

received. In 2011, we significantly reduced customer com-

plaints by 30% from 2010, as shown in the chart below.

We intend to promote the implementation of the quality

management system in order to achieve even greater reduc-

tions in the number of complaints and maintain zero product-

related accidents for preventing any threats or damage to cus-

tomers' lives/health or their properties. We plan to seek to earn

even higher levels of trust from our customers and to further

increase corporate value.

Activities targeting improved quality management levels

The Showa Denko Group performs periodic audits group-

wide across business divisions and worksites to raise quality

management levels.

In 2011, we implemented vigorous audits at 46 sites, identi-

fying issues and providing advice on improvement on the chal-

lenges concerning corrective actions set as priority targets for

2011 (in particular, classifying clearly a modification treatment

and a corrective action). This year's audits will continue to

focus on increasing the effectiveness of the quality manage-

ment system in 2012.

In addition to annual periodic events such as training semi-

nars for internal auditors, ISO/TS16949 seminars, presenta-

tions on quality assurance and quality-control rules, and prod-

uct risk seminars, we held seminars to upgrade the capabilities

of internal auditors at five sites. Furthermore, in 2011, we

started e-learning programs on quality control and risk manage-

ment, etc., and will improve the contents of the education

materials. Thus, we undertake a wide range of educational and

training activities to improve the quality management levels

throughout the year.

1 ISO (International Organization for Standardization) :A private-sector international specialist organization established in 1947 to

promote international standardization of products and services. In 1987, it

established the ISO 9000 series of standards on quality control and assurance;

in 1996, i t began establ ishing the ISO 14000 series of environmental

standards. The ISO 26000 standard for social responsibility was announced in

2010.

sites46 (where audit was conducted in 2011)

CSR Actuvity List of Declarations and Certifications

Web

下図参照

28


29


Shareholder and investor relations Partner relations

Valuation of our IR activities Continuing and increasing CSR visitsShowa Denko has its IR websites for shareholders and investors,

on which financial results, presentation materials, news releases, etc.

are posted on a timely basis.

We also place an emphasis on information disclosure for our

overseas or non-Japanese investors by providing quarterly financial

results and annual reports, etc. on the English-version website.

We will continue to carry out our CSR visit

program with the aim of realizing dialogues

with as many supplier partners as possible.

Furthermore, we are considering an expansion

of this program to our domestic Group compa-

nies as well as collaboration with overseas

supplier partners as realistic measures.

“Although I didn’t think that CSR was for a small company like us, we have started our CSR efforts after the Showa Denko staff visited us.” (A construction company)

“I have participated in CSR presentation meetings of our clients in the past, but I used to just listen unilaterally. When they visited us recently, it was very easy to understand because we talked face to face.” (A construction company)

“After receiving a CSR visit, we made it obligatory to wear a helmet for the safety of employees.” (A packaging materials company)

“We started to implement CSR activities influenced by the CSR procurement of Showa Denko. All of us are working on those activities more positively than expected.” (A construction company)

Voices of our supplier partnersOur CSR activities for 2012TOPICS for 2011

companies225 (Past results of self-assessment:

Answers from the existing and newsupplier partners)* Self-assessment forms were sent to269 companies. Response rate: 84%

visits56 (Total number of CSR visits conductedcompanywide) * Targets for 2011: 50 visits

Responded: 995companies

(response rate: 78%)

Not responded

Total number of “Self-assessment”for three years

send to1,223

companies

This website won the “Fiscal 2011 Listed Company Quality

Website Award” of Nikko Investor Relations Co., Ltd., and the “Award

for Excellence in Internet Investor Relations 2011” of Daiwa Investor

Relations Co. Ltd. Also, we received the “Laudable Award” of the

2011 Awards for Excellence in Corporate Disclosure selected by

Security Analysts Association of Japan, as it was our third year in a

row to receive the same award.

Basic policy on information disclosureShowa Denko believes disclosure and investor relations play

a vital role in deepening shareholder and investor understanding

of our approach to various issues, including corporate manage-

ment, business activities, and strategy, helping these stakehold-

ers accurately assess our corporate value. Our information

disclosure measures are based on the following policies:

Basic policy on purchasingShowa Denko’s basic policies for the selection of supplier

partners are as listed below, under which we concentrate our

efforts in fulfilling our social responsibility while promoting CSR

procurement in collaboration with those supplier partners.

CSR procurement activitiesShowa Denko undertakes CSR procurement, attaching

importance to the society- and environment-conscious busi-

ness activities in the entire supply chains from the procurement

of raw materials to manufacture and sale. Our CSR procure-

ment aims to mutually improve corporate value of both supplier

partners and Showa Denko by sharing and complying with the

Showa Denko Group CSR Procurement Guidelines with sup-

plier partners through communication to further enhance

mutual trust.

In 2011, we focused our efforts on the expansion of “Self-

assessments” and “CSR visits” that had been initiated earlier to

further deepen the contents of those activities.

In the wake of the occurrence of the Great East Japan

Earthquake in March 2011, we were obliged to change our

Communicating with shareholders and investorsShareholder meetings

Showa Denko holds a regular general meeting of sharehold-

ers each year at the end of March. In addition to invitations

issued around four weeks before these meetings, we post

related information on our website to ensure shareholders have

enough time to consider various proposals. We have adopted

a system whereby shareholders can exercise voting rights via

the Internet, allowing even greater numbers of shareholders to

participate.

At the general meeting of shareholders, Showa Denko

reports the progress of

its medium-term con-

solidated business plan

and main topics of its

business, and demon-

strates products and

technologies of the

Group companies at a

display space created

for that opportunity.

Outline of the basic policies:We seek to communicate proactively with sharehold-ers and investors and to improve management trans-parency.

We strive to disclose information concerning Showa Denko in a clear, fair, timely, and accurate manner to deepen understanding of and trust in our company.

We will take a comprehensive approach in selecting most suitable supplier partners based upon economic rationality by taking into consideration quality, price, delivery period, credibility of management, safety, services, technological competence and attention to environment and society.� In selecting our supplier partners, we have an open-door policy for business opportunities with sincerity, fairness and honesty, disregarding the nationality, past records of transaction and the corporate group relationship of the candidate companies.

Our purchasing activities shall be in compliance with laws and regulations, as well as our internal rules.

1

2

Display at the venue of general meeting of shareholders

CSR visits

1

2

3

plan signif icantly, including a

two-month suspension. How-

ever, on the other hand, it turned

out to be an opportunity for us to

become strongly aware of our

collaborative relationships with

supplier partners, which resulted in more fruitful activities.

In the recent self-assessments, the response rate rose as

we contacted supplier partners more frequently which had not

answered before. As to CSR visits, our activities were con-

ducted with stronger awareness of enhancing trust relation-

ships with partners and improving mutual corporate values.

We look forward to your understanding and cooperation for

further development of our CSR procurement activities.

Cumulative number of CSR visitsconducted:

1

40

96

2009 2010 2011 (year)

(Number of visits)

0

20

40

100

Communicating with institutional investors and shareholders

We keep domestic institutional investors, analysts, and other

market participants informed in various ways, including meet-

ings to explain annual and semiannual financial results, net-

conferences for results announced for the first and third quar-

ters, and meetings to outline progress with business plans.

Overseas institutional investors and shareholders receive

English-language versions of our annual results and transcripts

of net-conferences, and other materials. In addition, several

times each year, the President and/or members of the man-

agement team visit Europe, North America and Asia to report in

person on various issues, including Group business results

and future business plans.

To communicate with individual investors, we participated in

seminars for private investors hosted by securities firms and

other organizations,

reporting on the results

of our business and

future business plans,

and answering ques-

tions raised by inves-

tors, while displaying

our products. Presentation meeting for institutional investors and securitiesanalysts on the progress of the medium-term consolidated business plan

Returning profits to investorsPayment of dividends to shareholders is one of our impor-

tant obligations, and it is our basic policy to determine the

details of dividends by taking into consideration profits of the

relevant fiscal year and retained earnings reserved for future

business development. Retained earnings will be applied to

capital expenditure and R&D activities for nurturing and acceler-

ating growth business, and to the improvement of financial

standing.

30


31


Community relations

Results of our local and socialcontribution activities

Number of sites*Details of the activities Results

14 cases; Dispatched 178.5 man-hours

25 events implemented; Accepted 66 interns.

Conducted for 5,986 hoursin total.

* Number of worksites that conducted the CSR activities: 16 worksites, head office and 3 branches

●Cleaning activities

●Dispatched employees as instructors.

●Accepted interns.

17

6

9

1

2

RESULTS

The Showa Denko Group checks the status of the CSR activities conducted by each work-site and the domestic and overseas affiliated companies to improve those activities and share the information on the CSR-related achieve-ments within the entire Group. The status of the activities in 2011 is shown on the right.

Education:

Improvement of the environment around the worksites:

We focus on giving knowledge on chemical substances, interest in chemistry, and relationship with environment and other aspects of “chemistry.”

We conduct cleaning activities by ourselves or together with local residents paying attention to the environment around the worksites.

Rented for 12,669 hours in total.

5,332 residents participated.

8,698 residents visited plants.

Spent 1,494,000 yen.

Spent 133,000 yen.Spent 5,818,000 yen.

●Facilities rented

●Holding events

●Offering guided plant tours

●Harmonizing with local economy

●Collaborating with NPOs and local organizations

●Cooperation for and granting subsidies to arts, culture and sports

11

11

16

16

418

4 Exchange with local communities

3 Promotion of arts, culture and sports

5 Community development and social welfare

We attach great importance to the exchange with the local communities by opening the Group’s facilities to local residents and holding events to which people are welcome.Furthermore, we publish worksite information magazines and invite local residents to participate in plant tours with the aim of realizing dialogues with local communities.

We will contribute proactively to the development of local economy by participating in the events hosted by the local community associations, and participating and cooperating in urban development planning and town vitaliza-tion activities, technical assistance to local medium- and small-sized companies, actively creating local employ-ment, and local procurement of merchandize and materials. Furthermore, our contribution to local communities also extends to a collaboration with NPOs and local organizations in the social welfare-related activities, etc.

We offer support to the promotion of arts, culture and sports.

Number of sites*Details of the activities Results

The Showa Denko Group contributes to society by providing

products and services and by making the most of the Group's

unique resources (technologies, human resources, facilities)

The Group participates aggressively in educational programs

for children, who will assume leading roles in our future society. It

also contributes to local communities through demonstrations and

lectures on chemistry and the environment, as well as guided

tours of the plants.

Contribution to chemistry/environmental educationClass-on-demand for making objects (Kitakata Plant)

Kitakata Plant held a “Class-on-demand for making objects”

on July 28, 2011. This class was jointly sponsored by Kitakata

City government, Fukushima Prefectural Kitakata Tooh High

School and the Kitakata Plant, intended to increase interest in

manufacturing and understanding of the activities of the local

company.

Participants selected in a drawing included 20 elementary

school pupils and nine high school students as instructors to

teach how to create robots.

After a guided plant tour, the participants engaged in making

robots for about two hours. They had a tournament of their own

robots, and a fifth-grader girl won first prize. Many participants

expressed their general

impression of the event,

“Mak i ng robo ts was

difficult, but I was excited

about it. I do want to join

the event next year, too!”

It is Showa Denko’s

wish to give dreams and

hopes to children toward

the future.

Participated in a chemistry experiment event for children: Chemistry Makes Our Dreams Come True:

Showa Denko's Head Office and Analysis & Physical Properties

Center participated jointly in the chemistry experiment event

"Chemistry Makes Our Dreams Come True" for elementary school

pupils and junior high school students, which was held at the

National Museum of Emerging Science and Innovation ("Miraikan")

in Odaiba, Tokyo on November 26 and 27, 2011.

We gave a class of experiment on the theme of "Making

candles from soap" as in the previous year. A candle can be

made in the following process: Put some lemon juice into soapy

water to generate small pieces of wax that will come up on the

surface of water; Collect these pieces of wax, and put them in a

container; Heat the container to melt the wax, and put a candle-

wick in it; Then, cool it until the wax becomes hard. We could

demonstrate how interesting chemistry is by using something

familiar to us. There were so many applicants for this class that

they reached the capacity in a blink of an eye.

“Chemistry Makes Our Dreams Come True” is an event initiated

in 1993 and hosted jointly by The Chemical Society of Japan, The

Society of Chemical Engineers, Japan, Japan Association for

Chemical Innovation and Japan Chemical Industry Association as

part of “Yume Kagaku-21” (dreams and chemistry toward 21st

century) campaign supported by the Ministry of Education,

Culture, Sports, Science

and Technology, and the

Ministry of Economy,

Trade and Indust ry .

S h o w a D e n k o h a s

participated in this event

as part of its CSR activi-

ties.

Interaction with local community-Efforts to keep towns clean

Activities at Tokuyama PlantIn East Yamaguchi district, where the Tokuyama Plant is

located, the Shunan City Environment Preservation Council and

the 17 member companies of the Japan Responsible Care Coun-

cil (JRCC) jointly hold Responsible Care (RC) １ community

dialogue meetings every year. This event is typically attended by

many local residents and students as well as administrative staff

members to exchange opinions proactively.

As part of the RC community dialogue meetings, we started

cleaning activity jointly in 2009 which had been requested by

many local residents. These volunteer activities are active coop-

erative works between the communities and companies, which

are attended by more than 1,000 people in total every year includ-

ing local residents (with administrative staff) and approximately 750

participants from those 17 member companies.

The said cleaning activity is conducted jointly by the Tokuyama

Plant, the neighboring two member companies and three commu-

nity associations of Hirano district (approximately 100 participants)

in community parks as well as flowerbeds owned by the commu-

nity associations at the request of the local community associa-

tions.

Other than the above, we

positively conduct cleaning

activities in Kano district,

Shunan City, such as tree

thinning operations (by forest

volunteers of the Town,

Forest and Water Network-

ing) in cooperation with the member companies of the Shunan

District Industrial Water Users Council with the aim of maintaining

the water source areas and cleaning the Nishikigawa River.

Interaction with local communities-Communication with residents of local communities

RC Community Dialogue Mini-meetingsOn February 27 and March 6, 2011, the Oita area community

dialogue mini-meetings were held at the Oita Complex, which

were attended by 50 residents. These mini-meetings are for the

residents of the Misa and Tsurusaki school districts near the Oita

Complex, and held in a year when the RC community dialogue

meetings are not held.

About eight people including participants from companies

seated around each table exchanged opinions frankly for approxi-

mately one hour and a half.

Many local residents gave us feedbacks that the dialogue

meeting was very fruitful, and some of them gave us a positive

impression, saying “I learned about what they were making at the

plant, as well as other things such as the odor released from the

plant and guided plant tours. I do want to participate in a plant tour

to learn more.” We are aware that the company image has

changed a lot as a result of holding mutual communication repeat-

edly. Therefore, we will continue to promote mutual understanding

on a community basis.

1 RC Community Dialogue Meetings:The RC community dialogue meetings, which are sponsored by the Responsible Care

Committee of the Japan Chemical Industry Association and held jointly by companies,

focus on dialogues with the public administration and the local residents concerning

community safety and the preservation of the environment.

Cleaning volunteers in Hirano district

Children struggling to make robots

volunteersparticipated

A total of approx.

750 (from 17 companies).

Forest volunteers

Chemistry Makes Our Dreams Come True: A chemistry experiment event for children

32


33


Community relations

1 Trident United Way :A non-profit organization working to strengthen communities in Berkeley, Charleston and

Dorchester counties, South Carolina, by focusing on education, financial stability and

health.

CSR activities in other countries -EducationP.T. Showa Esterindo Indonesia implemented an SEI’s Open

House program on November 17, 2011. This guided plant tour

was initiated in 2011 so that people living near the plant would

be able to understand about the company. In the first fiscal

year, about 60 local kindergarten children (of five to six years of

age), their parents and teachers were invited to visit and see

the plant. In the second year, we plan to invite junior-high and

high school students.

Since 2000, an internship training program has been imple-

mented. Under this program, the second-grader students of

the neighboring technical high schools (they will become the

third-grader in July when a new school year begins) are

assigned to various departments of the plant for two months

from June to July to experience practical operations.

In 2011, two students majoring in chemistry were invited

from SMKN 1 Pulo Ampel, and assigned to the Quality Assur-

ance Department where they experienced process analysis

and product analysis, etc.

The company has once hired a highly capable student who

had experienced the internship program upon graduating from

university as an employee, and plans to accept more interns

toward the future.

CSR activities in other countries-Interchanges with local communities

Showa Denko Rare-Earth Vietnam Co., Ltd.On November 6, 2011, a festival of the Japanese living in

Hanoi entitled “Sending the Vigor of Hanoi to Japan 2011” was

held in Hanoi, Vietnam. Showa Denko Rare-Earth Vietnam Co.,

Ltd. participated in the operation of this festival as volunteer

supporters. The main purpose of this big event is to introduce

Japanese culture, and is hosted by The Japan Business Asso-

ciation in Vietnam. There were Yosakoi Soran dance show and

dance by the children of Sakura Kindergarten on the stage, as

well as Bon festival dance by the members of a women’s soci-

ety. Over 3,100

people visited the

festival.

Environmental monitors’ meetingOn December 21, 2011, an environmental monitors’ meeting

was held at the Oita Complex. This meeting is intended to realize

an early resolution of environmental problems caused by the

Complex such as odor, noise and other phenomena of concern

that were pointed out by the local residents, and to raise control

levels, which is highly acclaimed

by the relevant authorities. The Oita

Complex commissions 20 moni-

tors. This time, 12 of them partici-

pated in the guided plant tours and

joined the meeting to exchange

views.

Development and welfare of the local com-munity -Disaster relief efforts

Relief efforts for the regions hit by the Great East Japan EarthquakeThe Showa Denko Group remitted a total of 100 million yen to

Fukushima Prefecture, Soma City, Shinchi-town, where the busi-

ness bases are present, and the Japanese Red Cross Society as

relief money in hopes of the earliest possible restoration of the

quake-hit regions.

In addition, heartfelt relief money of more than 10 million yen

was collected from among the employees and sent to the disaster

victims in collaboration with the labor union of Showa Denko.

Furthermore, the Chambers of Commerce of Aizuwakamatsu

City and Kitakata City, Fukushima Prefecture and Showa Denko

jointly held an event of “Fukushima and Aizu Foods and Products

Marché” at the Head Office (June 24), the Kawasaki District

Summer Festival (July 28), the Yokohama Plant (August 9) and the

Sakai Plant (September 9). In

addition, a mail-order service

for merchandise made in

Fukushima Prefecture was

conducted exclusively for the

employees of the Showa

Denko Group companies.

Responses to the major flood in ThailandOne of our affiliated companies, Showa Aluminum (Thailand)

Co., Ltd. (“SAT,” which was assigned to Keihin Corporation in

January 2012), also suffered damages due to the major flood that

broke out in Thailand in 2011. Showa Denko donated 10 million

yen as relief money for the affected region and the affected people.

TOPICS for 2011

For the development and welfare of localcommunities – Aluminum can recycling activities

As part of its CSR efforts, the Showa Denko Group asks employees

and cooperative companies to collect aluminum cans for recycling. In

2011, these efforts resulted in the collection of 6.07 million cans,

equivalent to approximately 98 t of aluminum.* The revenue generated

was donated to local councils active in social welfare, associations for

the physically challenged, and other organizations and used to promote

welfare activities in local communities.

(* Calculations assume 1 can = 16.2 grams)

The aluminum metal used to manufacture aluminum cans can be

obtained by melting and refining raw ore. Producing aluminum metal

from recycled aluminum cans cuts the electrical power required for

production, to as low as 3% of the power required for the production from

raw ore. The Showa Denko Group aggressively promotes aluminum can

recycling not just to contribute to regional communities, but to help

conserve energy and resources. As of the end of 2011, the employee

participation rate reached 92.3%.

Showa Aluminum Can Corp., a subsidiary, manufactured aluminum

beer cans for the first time in Japan in 1971. The company's employees

initiated voluntary aluminum can recycling activities in 1972. These activi-

ties have gradually expanded to involve the entire Showa Denko Group,

marking their 40th anniversary in 2011. We will continue to energetically

pursue these efforts to contribute to the environment and to our local

communities.

million cans collected.million cans collected.AboutAbout6.076.07(Equivalent to about 98 t of aluminum)

Energy-saving effect in aluminum (based on electrical power required for production)

3

100

Virgin metal Recycled metal Donated earnings from aluminum can recycling to the Public Health and WelfareSection of Ichihara city office (Chiba Plant)

Production needs only about 3% ofelectrical power.

On December 23, 2011, an exchange party of the liaison

council of Japanese companies in the Dong Van II Industrial

Park, where Showa Denko Rare-Earth Vietnam Co., Ltd. oper-

ates, was held. This party is held by each Japanese company

operating in this industrial park in turn. And in 2011, it was

Showa Denko Rare-Earth’s turn to organize the party, and

people of those Japanese companies and the deputy general

manager of the Corporate Liaison Council Administration

Bureau of Hà Nam Province were invited. The Liaison Council

activities were reported and several games were played, thus

the exchange was deepened.

Showa Denko Carbon, Inc.Showa Denko Carbon, Inc. (in the United States) participates

every year in the support activities of Trident United Way. 1

One of their activities, “Links to Success,” is an educational

program to help school children improve their school records

and life attitudes, in which individual volunteer instructors

recruited from private organizations or public team up with

students on one-on–one basis for one year to help learn the

subject the partner student is lagging after school.

In 2011, eight volunteers participated from Showa Denko

Carbon to assist pupils of Harleyville/Ridgeville Elementary

(HRE) School. HRE held a banquet at the end of the program

year, which was covered in a news program of local media.

Exchanging views at the environmentalmonitors’ meeting

Exchange party for of the liaison councilof Japanese companies (December 23)

Students under the internship training program

View of SEI's Open House

A view of the event held at the Yokohama Planton August 9

1

peopleparticipated.3，100

34


35


Environmental effortsCSR Activity Report: Environmental efforts

Recognizing environmental conservation as a high-priority management issue, the Showa Denko Group is committed to cutting emissions of chemical substances and reducing industrial waste generation to prevent global warming and other environmental problems. The Showa Denko management policy also includes safe, stable operations and thorough Responsible Care activities. All members of the Group work hand-in-hand to eliminate accidents and disasters.

Typical environmental impact index at Group companies

2006 2007 2008 2009 2010 2011

GHG emissions (kt-CO2)

Final landfill disposal (t)

Emissions of JCIA PRTR-listed substances (t)

Energy conservation

Resource recycling

Waste reduction

Other

Total

SOx

NOx

Soot and dust

COD

Total nitrogen

Total phosphorus

Landfill disposal

Unit energy consumption

494

1，715

76

431

212

61

456

1，540

68

429

1，341

90

406

1，120

69

233

768

5

0

1,006

3,698

3,522

283

786

607

51

19,723

100%

457

1,238

153

386

502

16

1,932

91.4%

1990 2011

435

201

62

7

6

1 Following the merger that took place in July 2010, the data for 2011 include the results of the former Showa Highpolymer Co., Ltd.

2 Greenhouse gases (GHGs):This term refers to atmospheric gases that have greenhouse effects.GHGs emitted in large volumes by human activity cause global warming. GHGs include carbon dioxide, methane, nitrous oxide, and chlorofluorocarbons. Infrared light radiated from the earth’s surface releaes heat brought by sunlight into outer space. GHGs trap this infrared light, resulting in higher atmospheric temperature.

3 Emissions of toxic atmospheric pollutants are included in emissions of PRTR-listed substances.

4 Waste water volume from designated facilities:Wastewater volume from business facilities designated under the Water Pollution Control Act.

5 Reductions:This term refers to reducing the volume of waste by dewatering, drying, burning, and other means.

6 Scope of the Showa Denko Group:Total for the ten consolidated manufacturing subsidiaries in Japan: Showa Denko Gas Products Co., Ltd., Showa Titanium Co., Ltd., Showa Aluminum Can Corp., Showa Denko Packaging Co. Ltd., Showa Denko Kenzai K.K., Niigata Showa K.K., Nippon Polytech Corp., Showa Denko Kenso Co., Ltd., Tohoku Metal Chemical Co., Ltd., and Showa Denko HD Yamagata K.K. GHG emissions include those for Showa Denko Electronics K.K. and Tsurusaki Kyodo Doryoku Co., Ltd. and exclude those for Niigata Showa K.K., Nippon Polytech Corp., and Showa Denko Kenso Co., Ltd., which are not required to report emissions as emitters designated under the Act on Promotion of Global Warming Countermeasures.

7 The figures given for final landfill disposal cover only waste generated by production activities in the respective years.

OUTPUTINPUT

Investment in the environment (cumulative total from 1990) Investment in safety and disaster prevention (cumulative total from 1990)

Economic benefitsReducing environmental impact

Energy

64.98Mm3

(-2,231m3)

Raw materials

Products

Waste reductions

59,291t(–2,453t)

Emissions of air pollutants

Greenhouse gases

SOx　NOx　Soot and dust　JCIA PRTR-listed substances

JCIA Toxic atmospheric pollutants　

(Showa Denko K.K. only)



(Showa Denko K.K. only)(Showa Denko K.K. only)

(t) (million yen)

The figures in parentheses represent increasesor decreases relative to the previous year.

Note: In principle, the data provided on this page represent total calendar year values. Data that must be reported to authorities represent total fiscal year values.

COD　

Total nitrogen

Total phosphorus

JCIA PRTR-listed substancesWastewater volume fromdesignated facilities

35,141 t (-1,053t)

Emissions of water pollutants

Waste discharge

Plants operated byShowa Denko

1.05Mkl(crude oil equivalent)

(-10,000Kl)

Water

Internal Utilization

3,714t(-1,844t)

2,254kt - CO2 (–52kt–CO2)

457t (–7t)

1,238t (–47t)

153t (+22t)

317t (+44t)

28t (–4t)

386t (–58t)

502t (–72t)

16t (+4t)

55t (+12t)

33,914,000t (+3,797,000t)

Use outside Showa DenkoReductions in volumeoutside Showa Denko

15,413t (+3,671t)

17,798t (–4,265t)

Landfill disposal 1,932t (–458t)

1110090807060504030201000

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

99989796959493929190 (year) 11100908070605040302010099989796959493929190 (year)

(million yen)

(million yen)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1

Detail Capital investment Expenses

(million yen)


Pollution prevention

Global environmental protection

Resource recycling

995

850

124

0

20

298

0

0

2,287

356

835

2,006

55

582

200

11

274

4,319

Cost within business site

Upstream and downstream costs

Administrative costs

R & D costs

Community outreach costs

Other

Total

Capital investments and expenses associated with prevention of atmospheric/water/soil pollution, noise, vibration, odor, etc.

Capital investments and expenses associated with energy conservation and combating global warming and ozone-layer depletion

Capital investments and expenses associated with resource conservation and waste treatment

Costs associated with reducing environmental impact in business operations upstream and downstream, including green purchasing and recycling of products and packaging

Administrative costs relating to environmental conservation, including environmental issues training, introduction of

environmental management systems, and environmental impact evaluations

Costs associated with research and development of environment friendly products and technologies

Environmental conservation costs for local community outreach activities not directly linked to business operations, such as environmental conservation projects in communities, dialogue with residents, and plant tours

Compensation for health damages resulting from environmental pollution, etc.

Cost

4

3

2

5

The diagram below summarizes the resource use and environmental impact associated with the operations of Showa Denko.To reduce our impact on the environment, the Group is currently pursuing the efforts described below.

2011 resultsShowa Denko is committed to ongoing environmental invest-

ment designed to reduce energy consumption and minimize envi-

ronmental impact of our operations. Since 2000, environmental

investment and associated expenses as well as their effects have

been subject to evaluation in the form of environmental accounting.

In 2011, the investments were made in countermeasures

against the decrepit facilities of the Oita Complex, the Kawasaki

Plant and the Higashinagahara Plant (hydroelectric power gen-

eration).

Environmental accountingResource use and environmental impact

36


37


Climate change efforts

Trends in unit energy consumption (Showa Denko K.K. only)

TOPICS for 2011

Energy use reduction measures　Showa Denko Electronics K.K

Showa Denko Electronics K.K., a manufacturer of hard disks and

LEDs, continues its efforts to save energy as a member company of the

Showa Denko Group. In Fiscal 2011 the company focused its efforts on

all-out power saving in the entire plant due to tight power supply in the

wake of the earthquake disaster. Measures taken to address the power

shortage problem at the peak hours included consolidation of facilities,

review of the number of machines to operate, converting rotary

appliances into inverter-run motor drives, and shifting the processes of

waste liquid treatment and pure water production to night time,

realizing a reduction of 4,500 t in annual CO2 emission.

　Kawasaki PlantAt the Kawasaki Plant, as a measure to reduce environmental

load and enhance competitive edge of the worksite, new facilities

were installed and started operation to supply bleeder steam of the

power generation boilers located in the Ogimachi district to the

Okawa district and the neighboring affiliated companies across

canals through an undersea tunnel.

These facilities were established using the subsidy from the

NEDO’s Energy Saving Operations Support Program. In the past, we

used small-sized boilers to generate steam in each operating areas,

but it is expected that we will be able to save fuels equivalent to

4,700 kl annually and cut CO2 emissions equivalent to 2,400 t by

consolidating these boilers.

TOPICS for 2011

Measures for c-LCA

●Continuing to improve unit energy consumption●Achieving Kyoto Protocol targets for the Showa Denko Group by itself; preparing for post-Kyoto Protocol

●Creating energy conservation measures● Implementing reduction plans at each site●Thoroughgoing power consumption reductions

Policy

Plans

Plans for 2012

●Unit energy consumption: 91.4% (compared to 1990 levels), up 0.1% from 2010●Greenhouse gas emissions: 22% reductions at Showa Denko, 20 % reductions across entire Showa Denko Group (compared to 1990 levels)● Implementing the plan to achieve Kyoto Protocol targets in promise period (by Showa Denko)●Unit energy consumption as designated shippers in 2010 and reduction plans for 2011 reported to authorities.

Policy

Plans

Achievements in 2011Plans for 2011

●Creating energy conservation measures● Implementing reduction plans at each site

●Creating energy conservation measures● Implementing reduction plans at each site●Thoroughgoing power consumption reductions

C-LCA (carbon-Life Cycle Analysis) is a methodology to assess

the CO2 emissions in the total lifecycle of products from the time

their raw materials are taken, they are manufactured, distributed,

used up to the time they are abandoned. Showa Denko has started

quantification of its contribution to the reduction in CO2 emissions

generated from the use of our chemical products by comparing the

CO2 emissions in the production processes of our chemical products

as well as in the use of those products, with the CO2 emissions in

10 11090807060504030201009990

(%)

0

60

70

80

90

100

(year)

10 1109080706900

2,000

3,000

2,500

3,500

(FY)(Reference year)

Amountdischarged

(kt-CO2)

Change in discharged amounts of greenhouse gases and target figures (Showa Denko Group*)

08~12Group's target

Thermal power (including IPP):20%

Power use rates by source (Fiscal 2011)

Hydraulic power:20%

Power purchase:60%

Electric energy1,733GWh

* The emission factor (0.559t-CO2/MWh) as provided by the Ordinance of the Ministry of Economy, Trade and Industry, and the Ministry of the Environment No. 3 was used.

●Continuing to improve unit energy consumption●Achieving Kyoto Protocol targets for the Showa Denko Group by itself; preparing for post-Kyoto Protocol

+1% –1%–6%

–16%–19% –20%

–6%

the use of alternative products in the assumption that those

chemical products did not exist.

From the perspectives of total optimization across the product

lifecycles, not to mention the reduction in CO2 emission in the

manufacturing processes of chemical products, we will focus on the

contribution to the reduction in CO2 emissions of our entire commu-

nity generated from the use of chemical technologies and chemical

products by applying this methodology.

Promoting energy conservationRegarding energy conservation as a major issue both for

preventing global warming and protecting resources, the Group

is currently advancing various measures to conserve energy,

including reviewing and optimizing production processes and

modifying facilities.

In Fiscal 2011, the unit energy consumption by Showa Denko

worsened by 0.1% on a year-on-year basis due to an increase in

energy consumed appearing in the data. This was attributable to

the limited effects of improvement in unit energy consumption by

the new cracking furnaces that faced a trouble at the Oita

Reducing greenhouse gas emissionsThe Showa Denko Group reduced its greenhouse gas

(GHG) emissions 13% from the reference year (1990), based

on the average figure for the commitment period (2008 to

2010). We have set a goal of 6% reductions from the reference

year specified in the Kyoto Protocol by itself and are pursuing

further reductions in greenhouse gas emissions. We have also

set reduction targets for the emission intensity of greenhouse

gases in our manufacturing and filling processes, including

carbon dioxide, nitrous oxide, and CFC substitutes (e.g., HFC

and PFC). To achieve these targets, we are systematically pro-

moting various emissions control measures, including the

recovery of gases emitted during filling processes and the

installation of GHG decomposition and treatment units.

Reducing environmental impact through supply chain management (SCM) Lessening environmental impact in transportation

Showa Denko K.K. is working to reduce its environmental

impact by improving transportation efficiency and by promoting

a modal shift throughout its supply chain, from the procurement

of materials, through production and sales, to delivery.

The unit energy consumption in fiscal 2011 decreased by

approximately 4% compared with the previous fiscal year. This

improvement is mainly attributable to the rising ratio of sea

transport, especially the ratio of transport by more fuel-efficient

ships resulting in the reduction of the unit energy consumption.

Impact of the Great East Japan EarthquakeAs our distribution center at Soma Port, which had been

used for sea transport of liquid ammonia, was destroyed by the

tsunami, we shifted entirely to transport by tanker trucks to

deliver products from the Kawasaki Plant to customers in the

Tohoku region. While this measure resulted in a year-on-year

deterioration factor in unit energy consumption figures in fiscal

2011, the impact on the entire company remained insignificant.

Complex at the end of the fiscal year, combined with a year-on-

year decrease in the energy used at the Kawasaki Plant which

did not appear in the data.

The value for the previous fiscal year has been revised as

definite value in accordance with the data.

Showa Denko also operates hydraulic power plants near its

inland sites as clean energy sources, supplying approximately

20% of its total electricity use. Compared with assumed power

purchase, we would cut CO2 emissions equivalent to 190,000 t*

annually.

* Note: Scope of the Showa Denko Group: See 6 at the bottom of page 36. Data for the reference year includes data for Showa Light Alloy Co., Ltd. (Plant No. 1) and Shunan Denko K.K. but excludes data for Showa Denko Electronics K.K., Tohoku Metal Chemical Co., Ltd., and Showa Denko HD Yamagata K.K.

38


39


Climate change efforts Reducing chemical substance discharge

●Naphthalene　●Acenaphthene●Others

●Toluene　●1,3-butadiene●Others

●Dichloromethane ●Xylene　●Others ●Boron compounds●Hydrogen fluoride and its water-soluble salts

●Styrene　●Vinyl acetate●Others

●Toluene　●Formaldehyde●Others

●Normal-hexan●Vinyl acetate　●Others

Omachi Plant Kawasaki Plant

Total emissions67.4t

Tatsuno Plant Oita Complex Isesaki Plant

Total emissions7.5t

Higashinagahara Plant Chichibu Regional Office




Total emissions3.7t

Total emissions3.4t

600

500

400

0

Freight ton-km

(million ton-km)

(FY)09 10 11

551 561

470

100

150

50

0

Annual electric power usage at the Head Office

(year)10 11

110

–18.5%

135

38

34

30

26

22

24232221201918

0 0

Transportation sector's CO2 emissions and energy consumption rate

(thousandtons)

(10 thousandkWh)

(㎘/kl per million ton-km)(crude oil equivalent)

(FY)1109 10

33.1

26.2

22.521.7

20.9

CO2 emissions by transport sector

CO2 em

issions by transport sector

Unit energy consumption for transport

100

80

60

40

20

0

FY2011 ratios for use of various modes of transport(%) ■ ■ ■Road Rail Sea

Freight tonCO2 emissions Freight ton-km

59%

1%1%

3%

32%

63%

40%

66%

36%

●Responding properly to amendments to laws at home and abroad, reducing emissions

●Thoroughly disseminating information on, and implementing PRTR revisions●Developing and implementing reduction plans for each worksite

Policy

Plans

Plans for 2012

●Total emissions of PRTR-listed substances: 372 t, up 15 t from 2010

Policy

Plans

●Reducing chemical emissions


●Thoroughly disseminating information on, and implementing PRTR revisions●Developing and implementing reduction plans for each worksite

18.5%

●Methyl (S)-7-chloro-2, 3, 4a, 5-tetrahydro-2- [methoxycarbonyl (4-trifluoromethoxyphenyl) indeno [1, 2-e] [1, 3, 4] oxadiazine-4a-carboxylate●Others

32.4

Promoting a modal shiftTo reduce the environmental impact associated with product

transport, Showa Denko has been promoting a modal shift from

truck transport to sea and rail transport, since the latter modes

generate less CO2 emissions. In 2011, we switched from truck

transport for shipments from Kanagawa Prefecture to Aichi Pre-

fecture to rail transport.

In fiscal 2011, the freight ton-km by rail and ship transport in

Japan was approximately 384 million ton-km which corre-

sponds to approximately two-thirds of our total freight ton-km in

Japan.

In addition to the modal shift, we are improving transportation

efficiency by increasing the size of delivery lots, improving the

loading ratio of trucks and containers, and reducing transport

distances. In cooperation with transport companies, we are

striving to reduce energy consumption by adopting low-

emission vehicles,digital tachographs, and eco-friendly tires, in

addition to encouraging eco-friendly driving.

Promoting energy saving in officeWith the status of power supply shortage triggered by the

earthquake disaster as a turning point, all-out energy saving

measures is under way in our offices as well. At the Head Office

building, we reduced the annual electric power usage by 18.5%

in 2011 compared with 2010 by implementing the measures as

described below.

We will continue our power-saving efforts as part of energy-

saving activities.

Power-saving measures at the Head OfficeFacilities-related:●Room air temperature is set at 28 degrees Celsius by the

air-conditioners, limiting hours of use.

●Lightings are thinned out as much as possible all-year round.

●Lighting apparatus is exchanged with LED lighting system step-by-

step.

●Hot water supply is suspended in the office kitchens and toilets.

● Lights are turned off in spaces where lighting is unnecessary, and

during lunch time.

●Energy-saving mode of personal computers and printers should be

used.

●Standby power requirement should be cut. (Unplug cables or shut

off the main switch.)

●Operation of some elevators are suspended.

●Use of coffee brewers and electric pots is prohibited.

●Use of copy machines should be limited to the minimum level

required.

●Put up a notice of the daily power use and implement other enlight-

enment initiatives

relating to work:●Office hours are recommended to be moved forward by one hour,

and work after 19:00 hours is prohibited, in principle.

●Period for “Cool Biz” campaign is extended. (From May to the end

of October)

PRTRAs a member of the Japan Chemical Industry Association

(JCIA), Showa Denko since 1996 has voluntarily undertaken

surveys of the volumes of chemical substances it has

discharged and transported. In 2010, the Company performed

a survey of 590 substances, including substances subjected

to the PRTR Law, submitting a report to the JCIA on 160 sub-

stances (of which 103 were subject to the PRTR law). Total

emissions of PRTR listed substances were approximately 372

tons, approximately 15 tons higher than the previous fiscal

year.This was due to a plant in which the volume of solvent for

cleaning process use was increased. We are now considering

alternative cleaning agent.

Showa Denko will continue to make focused efforts to

reduce discharge volumes by preparing reduction plans for

each site for PRTR-listed substances and for substances with

high annual discharge volumes. The Company is currently

seeking to ascertain and assess potential impact in areas

surrounding its sites and improve communication with local

communities and governments concerning risks as it works to

reduce discharge volumes.

PRTR-listed substances released and transferred(Showa Denko K.K. only)

Release of PRTR-listed substances (Showa Denko K.K. only)

Emissions of PRTR-listed substances at respective sites in 2012 (Showa Denko K.K. only)

Volume transferred1,227 t

Total volume released372 t

Into soil0 t

Into water55 t

Into air317 t

Volumereleased/transferred

(t)

950

100

200

300

400

500

600

700

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11(FY)

Oyama Regional Office Shiojiri Plant

Total emissions3.1t

42.3% 41.2%27.8%

30.9%

100.0%

81.1%57.4%

42.6% 36.8%

63.2%

18.9%

70.6% 36.9%

26.0%

33.4%

35.9%

27.2%

13.3%

16.1%

23.8%

Total emissions1.0t

33.9%

40.6%

40


41


Reducing chemical substance discharge　 Environmental considerations: Atmosphere, water and soil


●Developing and implementing reduction plans for each worksite

Policy

Plans

Plans for 2012

●Emissions of toxic atmospheric pollutants: 28 t, down 12% from 2010; target achieved

Achievements in 2011

Policy

Plans


Plans for 2011

●Developing and implementing reduction plans for each worksite

Reducing emissions of toxic atmospheric pollutantsOn completing the JCIA Phase 2 Voluntary program for

reducing discharged volumes of 12 harmful atmospheric pollut-

ants, the Showa Denko Group is now working to achieve a new

target: a 10% year-on-year reduction in pollutants released in

relatively large volumes. In 2011, the total amount discharged of

nine substances handled by the Company was 28 tons, a

decrease of 4tons (12%) from the previous year.

The Group remains committed to achieving steady reduc-

tions in the discharge of toxic atmospheric pollutants through a

combination of various measures, including switching to substi-

tute materials and boosting recovery and recycling rates.(All graphs apply to Showa Denko alone.)

Total amounts released of harmful atmospheric pollutants

400

350

300

250

200

150

100

50

001 02 03 04 05 06 07 08 09 10 11

(FY)

( t )

Acrylonitrile

10

8

6

4

2

0

( t )

Kawasaki

Tatsuno

01 02 03 04 05 06 07 08 09 10 11(FY)

Acetaldehyde

( t )

Oita

Tokuyama

Trichloroethylene( t )

Kawasaki

01 02 03 04 05 06 07 08 09 10 11(FY)(FY)

01 02 03 04 05 06 07 08 09 10 11(FY)

1,3-Butadiene

( t )( t )

Kawasaki

30

25

20

15

10

5

0

Oita

01 02 03 04 05 06 07 08 09 10 11

01 02 03 04 05 06 07 08 09 10 11

(FY)

Formaldehyde( t )

Kawasaki

Isesaki

4

3

2

1

0

4

3

2

1

0

4

3

2

1

0

2

1

0

(FY)01 02 03 04 05 06 07 08 09 10 11

(FY)01 02 03 04 05 06 07 08 09 10 11

(FY)

Chloroform( t )

Tokuyama

Tetrachloroethylene( t )

Omachi KawasakiOyama

01 02 03 04 05 06 07 08 09 10 11(FY)

Benzene

( t )15

10

5

0

Kawasaki

Oita

OmachiTokuyama

Dichloromethane

Oyama

Higashinagahara

350

300

250

200

150

100

50

0

4

3

2

1

0

01 02 03 04 05 06 07 08 09 10 11

276

274

18

372

325

217

324

129

363

169

378

83

32

384

366

1

35

14

105

343

393

283

4

121

15

385

30

284

206

244

75

273

300

24

317

183

307

342

302

300

15

400

351

240

349

134

392

186

405

430

80

30

411

395

1

32

12

104

374

420

308

4

127

13

412

28

309

232

272

75

299

321

20

342

207

332

373

29

20

16

12

10

10

7

6

4

4

0

3

3

0

0

0

0

1

1

1

0

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

127

190

317

0

0

0

0

0

0

0

0

0

0

3

0

0

2

2

1

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

11

44

55

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

23

30

15

12

12

12

9

5

5

4

4

3

1

2

2

4

2

1

1

1

0

1

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

150

207

357

5

−10

1

−1

−1

−2

−2

0

0

−1

−1

−1

2

0

0

−2

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

−13

28

15

0

7

0

42

0

35

4

5

0

85

9

4

5

0

1

0

11

0

60

1

19

1

4

7

3

2

2

20

2

16

11

11

9

3

2

2

2

2

1

386

835

1,221

0

6

0

47

0

56

4

5

0

113

7

0

0

0

1

0

9

0

94

1

9

0

6

10

3

1

0

8

1

0

0

0

1

3

1

0

1

0

1

385

1,022

1,407

29

20

16

12

10

10

7

6

4

4

3

3

3

2

2

1

1

1

1

1

0

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

137

235

372

91-20-3

108-88-3

83-32-9

71-43-2

106-99-0

100-42-5

108-95-2

108-05-4

110-54-3

75-09-2

−

173584-44-6

1330-20-7

−

50-00-0

−

−

120-12-7

75-07-0

75-45-6

−

80-62-6

7440-02-0

−

67-66-3

75-05-8

−

107-18-6

−

68-12-2

−

−

95-53-4, 106-49-0

−

141-43-5

110-86-1

128-37-0

−

88-60-8

Naphthalene

Toluene

Acenaphthene

Benzene

1, 3-Butadiene

Styrene

Phenol

Vinyl acetate

Normal-hexane

Dichloromethane

Boron compound

JCIANo

PRTRNo. To Air

FY2010Total

release (t/y)

The amount ofincrease ordecrease forFY2010 (t/y)

FY2011 Totalamount oftransfer (t/y)

FY2010Amount oftransfer (t/y)To Water To soil

CAS No SubstancesTotal

FY2011 Release (t/y)

Total of the PRTR-listed substances

Total of the other substances (including JCIA PRTR-listed substances)

Total

Formaldehyde

Water-soluble salts of peroxodisulfuric acid

Zinc compounds (water-soluble)

Anthracene

Acetaldehyde

Chlorodifluoromethane

Hydrogen fluoride and its water-soluble salts

Methyl methacrylate

Nickel

Acrylic acid and its water-soluble salts

Chloroform

Acetonitrile

Manganese and its compounds

Allyl alcohol

Nickel compounds

N, N-Dimethylformamide

Copper salts (water-soluble, except

complex salts)

Cadmium and its compounds

Toluidine

Vanadium compounds

2-Aminoethanol

Pyridine

2,6-di-tert-butyl-4-cresol

Arsenic and its inorganic compounds

2-2-tert-butyl-5-methylphenol

Xylene

Linear alkylbenzene sulfonate and

its salt (limited to those whose alkyl

group carbon number ranges from 10

to 14)

Methyl(S)-7-chloro-2, 3, 4a, 5-

tetrahydro-2- [methoxycarbonyl

(4-trifluoromethoxyphenyl) carbamoyl]

indeno [1,2-e] [1,3,4] oxadiazine -

4a-carboxylate

Note: The numerical sum of each column or raw and the grand total may not agree due to rounding.

FY 2011 List of PRTR-listed substances released and transferred

Substances subject to the PRTR Law, other than dioxin: 103 substances (Substances with 1 t or less emissions or transfer volumes are excluded.) (Showa Denko K.K.only)

42


43


Biodiversity efforts

Environmental considerations: Atmosphere, water and soil

Reducing atmospheric impactThe Showa Denko Group is working to reduce emissions of

pollutants such as sulfur oxides (SOx), nitrogen oxides (NOx),

and soot through the following measures:

●Shift in fuel●Modifying combustion processes (e.g., using low-NOx burners)●Appropriate operation and management of desulphurization and

denitration systems

●Reductions in fuel consumption through exhaust heat recovery systems

●Strengthening monitoring systems

Amounts of SOx and NOx declined from 2010 levels

whereas soot increased. The Group will continue to seek to

reduce its environmental impact on the atmosphere.

Reducing water quality impactThe Showa Denko Group continues in efforts to reduce its

impact on water quality in areas such as chemical oxygen

demand (COD), total nitrogen , and total phosphorus through

the following measures:

● Improvements in manufacturing processes● Improvements in wastewater processing equipment and operation and control factors

●Promoting water reuse●Strengthening monitoring systems

COD and total nitrogen decreased from 2010 levels in con-

trast to total phosphorus that rose slightly. The Group will con-

tinue in efforts to reduce its impact on water quality.

Measures to prevent soil andgroundwater pollution

On occasions such as changes in the uses of plant sites or

soil removal, the Showa Denko Group undertakes surveys and

other measures in line with the Soil Contamination Countermea-

sures Law and local government regulations.

The Showa Denko Group has aggressively pursued various

Responsible Care efforts in its business activities, including

activities that reduce greenhouse gas emissions or address

other environmental considerations. In 2011, we have begun to

organize the use of ecosystem services to better understand

the impact on ecosystems in our business activities from a

broader perspective.

Based on the following perspectives, we are investigating the

relationship between biodiversity and the Group’s business sites

and supply chain for products and services.

Based on the results of these investigations, we will deter-

mine the items to be addressed in our biodiversity efforts and

the urgency and priority of them.

Use of living organisms or raw materials of biological originUse of hydroelectric power and biomass fuelUse of natural fresh water

Wastewater purification andair protection using ecosystem servicesDischarge of organic (biodegradable) waste out of worksitesProcesses using ecosystem servicesUse of rivers and canalsUse of ecosystem services to prevent natural disastersWelfare measures and facilities using natural environment

Use of mineral resources and fossil fuelUse of materials derived from plantation cropsGathering information on discharge into closed water systemssuch as lakes and swampsEffects of discharge on ecosystemsProducts and services intended to preserve ecosystemsProducts and services intended to reduce impact on ecosystemsEnvironmental loads imposed by transport activitiesGathering information on relationships with endangered species

Raw fuel:

Wastewater:

Exhaust gas:Product:

Transport:Ground:

Materials:Energy:Water:Wastewater,exhaust gas:Waste:Process:Transport:Ground:Others:

●Achieving zero emissions●Contributing to a recycling-based society

●Reducing landfill waste through efforts such as more effective use of sludge Target: Showa Denko: 1,900 t or less Group companies: 2,100 t or less●Promoting recycling

Policy

Plans

Plans for 2012

●Landfill waste: 2,144 t in the Showa Denko Group (down 447 t from 2010); Target achieved.●Plastic Chemical-recycling production: up 2% from 2010

Policy

Plans

●Achieving zero emissions●Contributing to a recycling-based society


●Reducing landfill waste through efforts such as

more effective use of sludge Target: Showa Denko: 2,200 t or less

Group companies: 2,500 t or less●Promoting recycling

Reducing waste and encouraging recycling

Reducing industrial waste and encour-aging recycling

To reduce the volume of industrial waste generated and

disposed of, the Showa Denko Group seeks to curb waste

generation, encourage reuse, and identify ways for effective use

of wastes.

●Reuse of waste acids and waste alkalis

●Use of waste oil and waste plastics as fuels (heat recovery)

●Effective use of inorganic sludge (e.g., in cement)

The final landfill waste volume for fiscal 2011 was 2,144 tons

(a year-on-year decrease of 447 ton, 17%), consisting of 1,932

tons (a decline of 458 tons) for Showa Denko, and 212 tons (an

increase of 11 tons) for the Group companies, which achieved

the Group’s target of 2,500 tons. While some sites recorded an

increase in the landfill waste volume due to special factors such

as removal and disposal resulting from withdrawal from busi-

ness, the majority of the Group companies (16 sites) attained

the zero-emission (Final landfill waste volume is 1% or less of

the waste generation) by the effective use of inorganic sludge

for production of cement (at the Kawasaki Plant and the Tatsuno

Plant). In Fiscal 2012, we have set the Group target at 2,100

tons to increase the number of worksites capable of achieving

the reduction in landfill waste volume and zero-emission.

In addition, Showa Denko is currently assessing contractors

for intermediate processing and final disposal to ensure appro-

priate processing and disposal of waste generated from us.

With respect to the discharge of bauxite residue into the sea,

the Company in fiscal 2011 maintained the volume of this

discharge at 11% below fiscal 2000 levels. The discharge into

the sea will be terminated by 2015.

PCB controlBased on its PCB control checklist, Showa Denko K.K. regu-

larly checks the status of stored polychlorinated biphenyl (PCB)

waste. This waste is appropriately stored in suitable facilities to

prevent leaks. Additionally, each worksite submits an annual

report on the status of stored PCB waste and related matters to

the prefectural governor, as required under the Law Concerning

Special Measures Against PCB Waste.

Taking full advantage of the waste processing facilities of

Japan Environmental Safety Corporation etc., we are continuing

systematic disposal of PCB waste.

＊Data for 2007 and earlier years represent total values for January through December. Data for 2008

and later years represent total values for April through March of the next year. (January through

December for the Kawasaki Plant)

90

Changes in final landfill volume

0

5,000

10,000

15,000

20,000

(t)

99 00 01 02 03 04 05 06

■ ■Showa Denko K.K. Group companies

07 08 09 10 11(year)

Use of ecosystem services

Controlling impact

on ecosystems

Change in discharged amounts of substances with water quality impact(Showa Denko K.K. only)COD and

totalnitrogen

(t)

Totalphosphorus

(t)

COD Total nitrogen Total phosphorus

(year)

1,000

800

600

400

200

0 0

20

40

60

80

100

Change in discharged amounts of substances with atmospheric impact(Showa Denko K.K. only)(t) SOx NOx Soot and dust

(year)90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

44


45


Disaster Prevention TOPICS for 2011

●Realizing zero equipment incidents

●Thoroughly implementing Active Safety activities●Organizing function-specific personnel meetings and preparing the guidelines●Ensuring the implementation of HRM examinations●Promoting voluntary safety initiatives

Policy

Plans

Plan for 2012

●Accidents: Four leaks in the entire Showa Denko Group (in contrast to seven leaks in 2010).●Active Safety activities expanded to and implemented by affiliated companies and research facilities.● Function-specific personnel meetings (electric, instrumentation, machinery, process) held.● Four HRM examinations implemented.●Oita Complex: Certified high-pressure gas operation continued.●The Oyama Plant of Showa Aluminum Can Corp. was awarded the Fire and Disaster Management Agency Commissioner award.

●Realizing zero equipment incidents


●Thoroughly implementing Active Safety activities●Organizing and applying function-specific personnel meetings●Thoroughly implementing HRM(High Risk Material) examinations●Promoting voluntary safety initiatives

Policy

Plans

CSR Activity Report: Safety Efforts

“We can prevent labor accidents, equipment accidents and environmental problems by learning from past accidents, by sharing information throughout the Group, and by implementing proactive countermeasures.” Based on the approach articulated in this way, Showa Denko launched its “active safety” initiative in 2008. Under the policy of “zero labor accidents, zero equipment incidents, and zero environmental problems,” each worksite has implemented this initiative in its own way, generally focusing on risk assessment activities based on checklists. The efforts are beginning to yield results.

Safety Efforts

Oita Complex: A conveyance and water discharge drill with a large-capacity foam release system

Equipment safetyBased on the policy goal of completely eliminating equipment

incidents, the Showa Denko Group has been proceeding with

its Active Safety initiative since 2008 by analyzing past acci-

dents and other problems to prevent their recurrence. As a

result, the number of equipment incidents in 2011 decreased to

four compared with seven in the previous year. All these inci-

dents were discovered in their early stages and did not cause

any human damage or external effects.

Including these cases, past incidents are systematized with

the active safety checklists in the Active Safety initiative, and are

used in all business sites to prevent future accidents.

In 2011, with the aim of further deepening the “Active Safety”

initiative, we classified, analyzed, reorganized the corporate MP

information 1 according to technical fields (machinery, electric,

instrumentation, process), and started to standardize the inher-

ently safe design by technical field, and prepare guidelines at a

study meeting combining members in the Head Office and busi-

ness sites. We also revised the fall prevention regulation, which

was informed of to all the employees of the Group. Toward the

future, we will continue these activities and cultivate next gen-

eration key persons, and improve the skills of the workers.

Precautions against earthquakesIn 2010, the Showa Denko Group started the prediction of

the scale of the ground motion in the event of an earthquake

expected in the future, risk assessment of the earthquakes and

consideration of earthquake-resistant measures for equipment

and buildings. We completed the assessment of 29 worksites

including affiliated companies by the end of 2011. We will

implement the earthquake-resistant measures for equipment

and buildings by setting a priority order depending on the earth-

quake risks.

On the other hand, the Great East Japan Earthquake that

occurred in 2011 was a massive interrelated earthquake in

which several earthquakes took place at the same time, and the

damage forms were different from those in the Great Hanshin

Awaji Earthquake. Based on this experience, we have added

countermeasures against tsunami and reinforced the measures

relating to liquefaction.

In 2012, we will continue to implement the risk assessment

of earthquakes as well as earthquake-resistant measures for

quick actions, paying close attention to the movements of the

government and municipal governments concerning the Nankai

Trough massive earthquake. In addition, we plan to consider

about how to secure our head office functions after a massive

earthquake which is anticipated to occur in the Tokyo Metropoli-

tan area.

On October 24, 2011, a conveyance and water discharge drill

with a large-capacity foam release system was conducted at the

Oita Complex. This is a drill of a system that is mandatorily

installed after the lesson learned from the full-scale fire at a float-

ing roof oil tank following the Tokachi Offshore Earthquake in

September 2003. In the Oita region, this system is installed jointly

in Shunan City, Yamaguchi Prefecture by the West Chugoku and

North Kyushu Wide Area Disaster Prevention Council.

In the morning, an installation drill was conducted for the

equipment transported by five large trucks. In the afternoon,

water was discharged in the direction of the sea, which showed

that the system had the predetermined capacity. Cooperation by

many people was important in the drill, and we finished the drill

safely with no accident or injury by checking each procedure very

carefully.

We will enhance the disaster prevention measures for the

Complex by continuing this kind of practical drills toward the

future.

Installation of a water pump　Discharging water

by a 40,000-liter per minutewater supply system

Conveyance and extension of water hose

1 Maintenance Prevention (MP) information:

　The Showa Denko Group has accumulated a database of accidents, troubles, significant

near-misses and countermeasures in and out of the Group, and now shares information

on approximately 4,800 cases among all employees.

46


47


Occupational health and safety

3

2

1

* Scope of Group companies (As of December 2011):Underlined companies are those added to the scope of industrial accident statistics in Fiscal 2011.): Tsurusaki Kyodo Doryoku K.K., Tokyo Liquefied Oxygen Co., Ltd., Showa Titanium Co., Ltd., Shinshu

Showa Co. Ltd., Showa Denko Packaging Co., Ltd. (Hikone and Isehara), Showa Aluminum Can Corp., Showa Denko Sakai Aluminum Co., Ltd., Showa Denko Electronics K.K., Showa Denko Kenzai

K.K., Union Showa K.K., Niigata Showa K.K., Showa Aluminum Can Recycling Center, HIPACK CO.,LTD., Showa Denko Gas Products Co., Ltd., Clean-S Showa K.K., Nippon Polytech Corp., Hamamatsu

Air Supply Co.,Ltd., STT Co.,Ltd., KANAE CHEMICALS Co., Ltd., Showa Denko Kenso K.K., Tohoku Metal Chemical Co., Ltd., Nagoya Kenmazai Kogyo K.K. (Nagoya and Shiojiri), Tokyo Aluminum Wire

Corporation, Showa Denko HD Yamagata K.K., and Fuyo Perlite Co., Ltd.

TOPICS for 2011

●Zero lost-time and non-lost-time injuries at each site●Establishing the chemical industry’s strongest safety management system

●Enhancing safety strength of worksites and personnel●Addressing equipment and process deficiencies● Improving safety management levels●Following up on special safety activities and strengthening measures to prevent similar incidents

Policy

Plans

Plans for 2012Achievements in 2011Plans for 2011

●Zero lost-time and non-lost-time injuries at each site●Establishing the chemical industry’s strongest safety management system

●Enhancing safety strength of worksites and

personnel ●Addressing equipment and process deficiencies● Improving safety management levels● Following up on special safety activities and strengthening measures to prevent similar incidents

●Expanded the scope of work-related accident statistics (12 worksites of affiliated companies were additionally included.)●Two incidents resulting in lost-time injuries (two in

2010) and zero non-lost-time injury (one in 2010) for the entire Showa Denko Group

●Rate of incidents resulting in lost-time injuries in Showa Denko Group: 0.13 (0.14 in 2010)

●Oyama Plant of Showa Aluminum Can Corp. won Accident-free Record Certification (Third-class) from the Ministry of Health, Labor and Welfare.

●Showa Titanium Co., Ltd. and Ohmuta Plant of Showa Aluminum Can Corp. recognized by third-party

safety awards.●Showa Titanium Co., Ltd. certified under the Occupational Safety and Health Management System (total of 12 sites now certified)

Policy

Plans

All Industries

Chemical Industries

Showa Denko K.K.

Showa Denko Group company*

1 Risk assessment:A series of processes intended to identify the risks and dangers inherent in a workplace;

to estimate the extent of damage and likelihood of occurrence based on such

identification; and to prioritize countermeasures and determine risk-reduction measures.

2 Occupational health and safety management systems:They are intended to allow organizations to reduce the likelihood of problems by

identifying, establishing, and implementing countermeasures against risks related to the

occupational health and safety of employees.

3 Frequency rate of lost-time injuries:Number of deaths and injuries occurring per one million working hours, as calculated by

the following formula:

Frequency rate of lost-time injuries = (Number of deaths and injuries) / (total working

hours) x 1,000,000

Showa Titanium Co., Ltd.Received the 2011 JCIA Grand Prix Safety Award

Occupational health and safetyTo eliminate workplace accidents, the Showa Denko Group

has been promoting active safety activities since 2008. These

activities are intended to prevent work-related accidents by

identifying and correcting risk sources based on risk assess-

ments . Specifically, in addition to using the active safety

checklists we prepared based on past accidents, our primary

sites have begun introducing the occupational health and safety

management systems that focus on risk assessments. As

of June 2012, 13 worksites in Japan and four worksites abroad

have acquired the relevant certification.

In 2011, the scope of work-related accident statistics was

expanded to include additional 12 worksites of affiliated compa-

AsbestosConditions related to asbestos were as follows.

Use of asbestosThe Group neither manufactures nor sells any products

incorporating asbestos.

The Group uses sealing materials containing asbestos for

certain production facilities, including those for chemicals. We

are currently replacing these materials with materials that do not

contain asbestos.

Health damageFor employees who have directly or indirectly handled

asbestos, we perform periodic health checkups as required by

relevant laws. No incidents of health damage have been

reported to date.

We also provide asbestos health checkups for former

employees of the Showa Denko Group, in addition to respond-

ing to various inquiries. In 2010, one cases (Latest edition

announced by Ministry of Health, Labour and Welfare) were

recognized as occupational accidents. We have received no

reports of injury or damage to health from families of employ-

ees, former employees, or residents of local communities.

In December 2011, Showa Titanium Co., Ltd. received the JCIA Grand Prix Safety Award. This award

recognizes exemplary worksites of business entities that implement excellent activities as part of voluntary

measures for safety and occupational health in the

chemical industry, and was selected upon on-site

investigations and deliberations by the safety

award committee consisting of experts.

Showa Titanium has continued to extend its

accident-free record through scrupulous safety

efforts such as risk assessments using common

databases, and the vitalization of “finger-pointing

checks” and “Attention! Thank you! campaign”

President (Right) and Manager of the Environment and Safety Dept.of Showa Titanium Co., Ltd. holding the award certificate.

70

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.07271 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 9392 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

nies to enhance the safety activities of the Showa Denko

Group. As a result, the rate of incidents resulting in lost-time

injuries in the Group reduced in 2011. During the period from

January to June 2012, one incident resulting in lost-time injury

and two non-lost-time injuries occurred. We will return to the

starting point of the Active Safety activities to disseminate them

in all worksites.

(Year)

Disaster prevention

Health and occupational safety

Fiscal 2011 THP Council’s Promotion Award

Japan Industrial Safety & Health Association Green Cross Award

Japan Industrial Safety & Health Association Green Cross Award

35th JCIA/JRCC Grand Prix Safety Award

The 36th JCIA Grand Prix Safety Award

2011 Fire and Disaster Management Agency Commissioner award (for superior facility in the handling of hazardous substances)

Fiscal 2012 Japan Association for Safety of Hazardous Materials President award (for superior facility in the handling of hazardous substances).

Fiscal 2010 Minister of Health, Labour, and Welfare's Award for business-facilitymanagers who place priority on safety

Special Award for Excellence, 2010 Japan Aluminum Association OccupationalSafety Awards

Accident-free record certificate from the Ministry of Health, Labour and Welfare (Third-class)

Fiscal 2011 Minister of Health, Labour, and Welfare's Award for business-facilitymanagers who place priority on safety

Award for Special Excellence, 2011 Japan Aluminum Association OccupationalSafety Awards

Award for Special Excellence, 2011 Japan Aluminum Association OccupationalSafety Awards

Oyama Plant of Showa Aluminum Can Corp.

Showa Titanium Co., Ltd.

Ohmuta Plant of Showa Aluminum Can Corp.

Oyama Plant of Showa Aluminum Can Corp.

Oyama Plant

Corporate R&D Center (Toke), Mr. Eiji Yoshimoto

Showa Titanium Co., Ltd., Environment and Safety Team, Mr. Yutaka Kuroda

Showa Titanium Co., Ltd.

Ohmuta Plant of Showa Aluminum Can Corp.

Oyama Plant

Yokohama Plant

Extrusions/Specialty Products Division, Production & Technology ControlDept., Extrusion Section, Mr. Hidemichi Keino

Extrusions/Specialty Products Division, Production & Technology ControlDept., Extrusion Section, Mr. Koichi Sashikubi

June 2011

June 2012

November 2011

May 2011

August 2011

October 2011

October 2011

October 2011

December 2011

January 2012

May 2012

May 2012

May 2012

Name of award Recipient site and individual Year received

2011-2012 List of RC-related awards received by the Showa Denko Group companies

Changes in frequency rate of lost-time injuries

48


49


Chemical substances safety efforts

TOPICS for 2011

●Appropriate response to revisions of domestic and overseas laws

●Comprehensive implementation of compliance, education, and management structures●Promoting and disclosing information on GPS/JIPS risk assessments●Effective use of comprehensive chemicals management database

Policy

Plans

Plans for 2012●Zero violations of chemical substances legislation by Showa Denko Group●Comprehensive chemicals management database established●Chemicals Management Officer provided information on relevant legislation and follow-up training●Registration prepared concerning substances under the REACH regulations １ before deadline for substances that must be registered by 2013●CLP-compliant 　2 labels and SDS 3 amended

●Appropriate response to revisions of domestic and overseas laws


●Comprehensive implementation of compliance, education, and management structures●Collecting, assessing, and providing safety information●Establishing comprehensive chemicals management database

Policy

Plans

Intended effects

1

2

3

4

Customer

Public administration

ConsumerCompany’s own plant

Publicinspection

Introducing a comprehensive chemicalsmanagement system

International chemicals management activities

As it works to achieve the goal agreed to in the World

Summit on Sustainable Development (WSSD) “to minimize the

negative effects of chemical substances on people and the

environment by 2020”. The Showa Denko Group is seeking to

implement integrated management of chemical substances

under the International Council of Chemical Associations (ICCA).

The Group is also taking part in Japan Initiative of Product

Stewardship, the new voluntary chemical management initiative

by JCIA to enhance risk assessment and risk management with

consideration for supply chain. Through this initiative, the Group

is strengthening product stewardship in various ways, including

collection of information and safety assessment at each stage of

manufacture, sales, and use/consumption.

We plan to conduct risk assessments of chemicals accord-

ing to priority, the Safety Summary Sheet which will be posted

on the portal site of ICCA’s GPS.

Foreign laws and regulationsWe make sure to respond properly by paying close attention

to new movements in legislations and regulations in foreign

countries, including the REACH and CLP regulations of the

European Union, the amendments to laws of the Asian coun-

tries (South Korea, Taiwan, China, Malaysia and others) and the

under considerations on the TSCA 4 of the Unites States.

While sharing information with the members of various busi-

ness divisions, Group companies as well as staff sections at the

head office and overseas companies, and participating in vari-

ous activities as a member of the international laws working

group in the JCIA, we will ensure keen and proper responses to

new movements in foreign countries.

To help achieve goal of the 2020 World Summit on Sustainable Develop-

ment (WSSD)—To use and produce chemicals in ways that minimize

significant adverse effects on human health and the environment— the

Showa Denko Group has introduced a comprehensive chemicals manage-

ment system to provide the basic infrastructure for managing chemicals. The

newly introduced comprehensive chemicals management system will

integrate information management for all chemicals we use in and outside

Japan and allow information sharing Groupwide. The system will also ensure

response in compliance with EU/REACH regulations, CLP regulations, and

various notifications required under the amended Chemical Substances

Control Law and PRTR Law (Pollutant Release and Transfer Register Law).

Sharing of information on chemicals throughout the Showa Denko GroupIntegrated management of information, including information on production, sales, the supply chain (SC) and use.

Safeguarding against human error related to the enforcement or revision of related laws and regulationsAutomatic updates of information on laws and regulations concerning products, linked to the databases of Japanese and foreign laws and regulations

Streamlined procedures for chemicals managementAutomatic updating and output of SDS information Improved data precision and transparency for each business site for use in compiling various statistical reports

Establishment and automation of the systems relating to chemicals risk assessment such as GPS and JIPS.

GHS-compatible SDSThe Group provides its customers and consumers with

information on risks or hazards related to all of its products for

sale in Japan using the JIS-based labels and SDS. Furthermore,

we are in the process of reviewing all those labels and SDS to

meet the new JIS 7253 standard.

For overseas products as well, we are making progress in

including GHS-compatible information on labels and SDS in

accordance with the relevant regulations in each country.

Furthermore, the Group prepares yellow cards 5 as provisions

against accidents involving chemical substances during road

transport. We enforce tanker truck drivers to carry the cards at

all times when transporting hazardous materials.

●Link to existing systems● Building the production and import

volume notification system in compliance with the amended Chemical Substances Control Law

●Automatic data aggregation of the chemical substances designated under the PRTR Law

●Consideration of introducing automatic system to prepare the GPS/JIPS Safety Summary Sheets

●Multilingual support for SDS and labeling●Automatic SDS output and labeling system

●Risk assessments of chemicals, linked to existing evaluation tools

(Achievements in 2011) (2012) (2013)1st Step 2nd Step 3rd Step

Risk and harmfulnessinformation, physical

property information, etc.

Chemicals management system(Comprehensive EH&S management system)

CSR report

Productionsystem

Purchase andsales system

Internal WEB API platformSupplier

Japanese lawsand regulations

database

Foreign lawsand regulations

database

Chemicalsmanagement

database

Productand materialinformation

Purchaseand sales

information

Riskassessment

tool

CSA/CSRsystem

PRTRemissions report

Emission dataunder PRTR

SDS

Comprehensive chemicals management system

5 Yellow card :This refers to an emergency contact card briefly describing appropriate response

by transportation company personnel, police, and fire-fighters in the event of

accidents involving hazardous or toxic substances.

4 TSCA:Toxic Substance Control Act

6 CSA :Chemical Safety Assessment

6CSASDS (including

non-Japanese versions)

JIPS Safety Summary Sheet3 SDS : (Safety Data Sheet)

This is a document provided by the supplier to the user (customer) of a chemical

substance, covering such matters as its name, toxicity, and physical/chemical

properties; cautions concerning its handling and storage; and emergency

measures.

1 REACH Regulation :EU Regulation on Registration, Evaluation, Authorization, and Restriction of

Chemicals

2 CLP Regulation :EU Regulation on Classification, Labeling, and Packaging

Notification of quantityto public administration

(under CSC and PRTR laws)

Disclosurein the ICCA GPS

portal site

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51


Third-party Verification/Assurance

We received the third-party verification/assurance about the contents of this CSR Report 2011 from SGS JAPAN INC.Adopting its opinions and suggestions into our plans for the next year, we will continu-ously strive to improve our CSR activities.

ASSURANCE STATEMENTThird-party Verification/AssuranceSGS Japan’s Report on Sustainability activities in the Showa Denko CSR Report 2012

NATURE AND SCOPE OF THE ASSURANCE/VERIFICATIONSGS Japan was commissioned by Showa Denko K.K. to conduct an independent assurance of the CSR Report 2012. The scope of the assurance, based on the SGS Sustainability Report Assurance methodology, included the text, and data in accompanying tables, contained in this report. Financial data was not included in this assurance process.

The information in the CSR Report 2012 of Showa Denko K.K. and its presentation are the responsibility of the govern-ing body and the management of Showa Denko K.K. SGS Japan has not been involved in the preparation of any of the material included in the CSR report 2012.

Our responsibility is to express an opinion on the text, data, graphs and statements within the scope of verification set out below with the intention to inform all Showa Denko K.K’s stakeholders.

This report has been assured at a moderate level of scrutiny using our protocols for: evaluation of content veracity

The assurance comprised a combination of pre-assurance research, interviews with relevant employees (Showa Denko K.K. head office and Sakai Plant); documentation and record review.

STATEMENT OF INDEPENDENCE AND COMPETENCEThe SGS Group of companies is the world leader in inspection, testing and verification, operating in more than 140 countries and providing services including management systems and service certification; quality, environmental, social and ethical auditing and training; environmental, social and sustainability report assurance. SGS Japan affirms our independence from Showa Denko K.K. being free from bias and conflicts of interest with the organisation, its subsidiaries and stakeholders.

The assurance team was assembled based on their knowledge, experience of the industry and qualifications for this assignment, and comprised auditors who are registered with Environmental, Quality, Occupational Health and Safety and Social accountability Management system Lead Auditors, and Greenhouse Gas Lead Verifiers.

VERIFICATION/ ASSURANCE OPINIONOn the basis of the methodology described and the verification work performed, we are satisfied that the information and data contained within Showa Denko CSR Report 2012 verified is accurate, reliable and provides a fair and balanced representation of the organisation’s sustainability activities during the reporting period.The assurance team is of the opinion that the Report can be used by the Reporting Organization’s Stakeholders.We believe that the organization has chosen an appropriate level of assurance for this stage in their reporting.

The audit team expresses the opinion for the approach in 2011 and 2011 fiscal year based on the information obtained by the above mentioned assurance procedure.

NOTEWORTHY EFFORTS AND FINDINGS ●Showa Denko K.K. revised the existing corporate code of conduct and published "Our Code of Conduct and Its Practical Guide" in 2011. Referencing ISO26000, this revision covered social responsibility core subjects in detail. The revision work, which was promoted by the working group primarily consisting of younger employees selected on a company-wide basis, has appropriately reflected opinions of people in the field. Therefore, the contents were specific and feasible. It is noteworthy that a code of conduct on the future of the organization has been developed through collaboration between employees and management. This code of conduct has been communicated through workshop-style training sessions and interviews regarding the code of conduct of people in the field. It is also worthy of note that the company has tried to cultivate employees' understanding that individual business operations are an integral part of CSR activities.

●It is remarkable that risk management continues to be implemented with special attention paid to details. Risk management at the company has run on the successive PDCA cycle, in which each risk related to organizational operations was clarified and weighted, countermeasures against the risks were developed and executed, and accom-plishments were reviewed. The company has managed potential risks by reducing it to an acceptable level.

FUTURE CHALLENGES AND EXPECTATIONS ●In addition to activities in Japan, the Showa Denko CSR Report 2012 provides information about efforts made by its overseas group companies to implement their social responsibilities. On the other hand, publicized performance data is limited only to that within Japan. Since Showa Denko K.K. is a global company where the ratio of its overseas groups' employee counts and sales is large, performance data from overseas companies is very important. In future, we expect that the company will disclose information regarding CSR activities of the entire group both in the CSR and other reports, by overcoming the difference in coefficients and regulations by country or region, making it public along with performance data of overseas group companies, or expanding the site report, which is currently issued for each business establishment inside Japan to overseas companies.

●Data on trends in social and environmental performance have been tabulated and reported. The above clearly shows the changes over the years, and continued disclosure is expected. However, the same descriptions that were used last year are used in the part of the report on performance-related activities. Besides the report, we have identified in the third-party assurance process that Showa Denko carries out activities worthy of disclosure, including the addition of measures against earthquake risk. Reporting on continuing activities is, of course, necessary, however, we expect in future that the company will evaluate the range of reported subjects on an annual basis and disclose a report that

clearly indicates the improvements and changes conducted as part of CSR management.

Signed:

For and on behalf of SGS Japan Inc.Masahiro Soga, Managing Director 13 July, 2012

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53


CSR Report 2012 Response to Third-party Verification/Assurance

First published in 1997 as “Responsible Care Report,” the

present form of CSR Report of the Showa Denko Group was

released in 2005 after the overall layouts were revised and the

contents improved with the aim of describing a wide range of

corporate activities except for financial information.

The Showa Denko Group, as chemical companies, uses a

large quantity of natural resources as material, consuming a

huge amount of energy in the process of product manufacturing.

Therefore, the impact of our business activities on the environ-

ment is definitely significant. We regard the minimization of the

energy consumption and the resulting emissions as our

important social responsibility in the meaning of contribution to

sustainable society. To that end, this report devotes much space

to the accounts on our Responsible Care activities.

We also explained about our corporate governance system for

legal compliance as the basis of fulfillment of our corporate social

responsibilities as well as the establishment of “Our Code of Conduct

and Its Practical Guide.” As the Verification/Assurance report has

stated that this “Our Code of Conduct and Its Practical Guide” is

a “Noteworthy efforts,” we will use it not only from the standpoint

of corporate ethics but a regulation concerning the entire CSR.

Furthermore, this report contains how we implement the risk

management and the relationships with our stakeholders

including employees and the residents in local communities.

As in last year, we commissioned SGS Japan Inc. to conduct

the third-party verification to prepare the verification report. They

confirmed in detail the basis for the calculation, accuracy and

credibility of the figures herein, and provided us with valuable

opinions on the relevant descriptions from the viewpoint of a

third-party.

In this year, RIO+20 (United Nations Conference on Sustain-

able Development) was held, focusing again on the compatibility

between the maintenance of the global environment and the

promotion of development.

The Showa Denko Group will promote further the ongoing

medium-term consolidated business plan PEGASUS toward the

realization of "a chemical company with a distinctive presence in

the global market" by executing business and providing products

friendly to the global environment.

We welcome your candid comments and opinions on this

Report.

July 2012Yasumichi Murata

Director and Managing Corporate OfficerChief Risk Management Officer (CRO)

Showa Denko K.K.

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